Removal of Conditions for EB-5 Immigrant Investors

Removal of conditions for EB5 immigrant investors, myattorneyusa.com

 

Introduction

The employment-based fifth preference (EB5) immigrant visa category is for immigrant investors. If an EB5 petitioner has his or her visa petition approved, he or she does not immediately become a full lawful permanent resident after being admitted with a visa or adjusting his or her status. Instead, the immigrant investor, along with his or her spouse and minor children, become “conditional permanent residents,” similar to the status assumed by many beneficiaries in the family-sponsored marriage-based preferences. Shortly before the expiration of the two-year conditional permanent resident period, an immigrant investor must apply for the removal of conditions from his or her lawful permanent resident status.

In this article, we will examine issues regarding conditional permanent resident status for immigrant investors and the process for removing conditions before the expiration of two years.

You can find our sections about immigrant investor issues in our section on the subject [see category].

Conditional Permanent Resident Status for Immigrant Investors

The Immigration and Nationality Act (INA) provides that “an alien entrepreneur …, alien spouse, and alien child [thereof] shall be considered, at the time of obtaining the status of an alien lawfully admitted for permanent residence, to have obtained such status on a conditional basis…” INA 216A(a)(1). In short, when an alien entrepreneur and his or her spouse or children are admitted for lawful permanent residence — either after being admitted with an immigrant visa or obtaining adjustment of status — they have conditions on their permanent residence status. The Government is required to provide notice to the alien entrepreneur about the process for removing conditions on his or her status, although the failure on the part of the Government to provide notice does not relieve the alien entrepreneur of his or her requirements regarding the eventual removal of conditions. INA 216A(a)(2)(A), (2)(C).

In general, conditional permanent resident status lasts for two years. The alien entrepreneur must apply for the removal of conditions from his or her permanent resident status “during the 90-day period before the second anniversary of the alien's lawful admission for permanent residence.” INA 216A(d)(2)(A). Two years is counted from the date on which the alien was admitted with an EB5 immigrant visa or the date on which the alien adjusted his or her immigration status pursuant to an approved EB5 petition — whichever is applicable.

In the forthcoming sections, we will examine situations in which conditional permanent resident status may be terminated and the rules and procedures for applying for the removal of conditions from permanent resident status.

Termination of Conditional Permanent Resident Status

In certain cases, the Government may terminate an alien's conditional permanent resident status before the expiration of the two-year conditional permanent resident period. The statute provides for the termination of status in the following cases:

The alien's investment was intended solely as a mean of evading the immigration laws (INA 216A(b)(1)(A));
The alien did not invest, or was not actively in the process of investing [see article] the requisite capital for EB5 classification, or the alien was not sustaining his or her investment throughout his or her period of conditional permanent residence in the United States (INA 216A(b)(1)(B)(i)-(ii)); or
The alien was otherwise not conforming to the requirements for EB5 classification set forth in INA 203(b)(5) (INA 216A(b)(1)(C)).

If an alien's conditional permanent resident status is terminated, the alien may request a review of the termination decision while in removal proceedings. INA 216A(b)(2). The statute provides that the Government bears the burden of proof to establish, by a preponderance of the evidence, that the termination of the alien's conditional permanent resident status was triggered by a condition set forth in INA 216A(b)(1).

One of the purposes of imposing conditions on the initial period of permanent residence for immigrant investors is to ensure that they follow through on their qualifying investments. Thus, an immigrant investor must continue to uphold the requirements for EB5 classification while on conditional permanent residence, including following through on the proposed investments included in his or her approved EB5 petition.

Removal of Conditions

The statute governing the removal of conditions from permanent resident status for immigrant investors is found at INA 216A(d). The USCIS set forth more detailed instructions and guidance for the removal of conditions process in its Policy Manual at 6 USCIS-PM G.5, which in turn relies on implementing regulations in 8 CFR 216.6.

Filing Timeframe

The removal of conditions petition is the Form I-829, Petition by Investor to Remove Conditions on Permanent Resident Status. The Form I-829 must be filed within 90 days of the two-year anniversary of the immigrant investor's being granted conditional permanent resident status (i.e., adjustment or admission on an immigrant visa). INA 216A(d)(2)(A); 8 CFR 216.6(a)(1)(i).

The failure to apply for the removal of conditions within the requisite 90-day period before the two-year anniversary of the immigrant investor's being granted conditional permanent resident status will result in the automatic termination of the investor's conditional permanent resident status. 8 CFR 216.6(a)(5). The investor will be notified of the termination of status, and there is no ground for appeal. 8 CFR 216.6(a)(5). The immigrant investor may request a review of the decision in removal proceedings, but in such event, the investor will bear the burden of establishing that he or she timely sought the removal of conditions. Id.

Late filings for the removal of condition may only be accepted if the immigrant investor establishes “good cause and extenuating circumstances” that excuse the late filing to the satisfaction of the USCIS. INA 216A(d)(2)(B). If the immigrant investor files late before jurisdiction over the matter vests with the immigrant judge and the USCIS determines that the investor established “good cause and extenuating circumstances,” the USCIS may approve the petition, restore the investor's status, remove conditions, and cancel any outstanding Notice to Appear. 8 CFR 216.6(a)(5). If the late petition is filed after jurisdiction vests with the immigration judge, the judge may terminate the matter upon joint motion by the investor and the DHS if the USCIS determines that the late filing was excusable. Id. INA 216A(d)(2)(C).

Derivatives

The immigrant investor may include derivative spouse and children who are also on conditional permanent resident status in his or her petition to remove conditions. If the immigrant investor's spouse and children are not included in the petition, they must file separate Forms I-829 to seek the removal of conditions. If the principal immigrant investor is deceased, the derivative spouse and children may file separate petitions to remove conditions or may be included in a single petition. If the petitioner's child reaches the age of 21 prior to the removal of conditions petition or if the petitioner and his or her spouse are divorced during the conditional permanent residence period, the child and/or divorced spouse may be included in the immigrant investor's petition or must each file a separate petition. 8 CFR 216.6(a)(1)(ii).

In a case where a deceased immigrant investor's spouse and children timely petition for the removal of conditions, the USCIS may remove conditions on their permanent resident status provided that they demonstrate that the immigrant investor had invested or was in the process of investing, that the investor sustained his or her investment, and that the investor had created or was on pace to meet the job creation requirements. 8 CFR 216.6(a)(6). We will describe those requirements in detail in the forthcoming sections.

General Requirements for Removal of Conditions

(Note: For the following sections, references and quotes are from 6 USCIS-PM G.5 [link], unless otherwise expressly noted.)

Immigrant investors must submit evidence to support the Form I-829 petition to remove conditions. First, the immigrant investor must submit evidence that he or she had invested, or was actively in the process of investing, the requisite capital and that he or she sustained the investment during the period of conditional permanent residency. Second, the immigrant investor must submit evidence relating to the job-creation or job maintenance requirement. In the case of an investment in a new commercial enterprise, the immigrant investor must submit evidence showing that the new commercial enterprise had created, or can be expected to create (within a reasonable time), at least 10 full-time positions for qualifying employees. In the case of a troubled business, the immigrant investor must submit evidence that the commercial enterprise has maintained the number of employees it had prior to the investment for the period of the investor's conditional permanent residence.

We will examine these requirements in more detail below.

Evidence of Investment and Sustainment of Investment

The immigrant investor must establish that he or she invested the requisite capital or was actively in the process of investing the requisite capital during the conditional permanent resident period. Evidence of the investment may include, but is not limited to, an audited financial statement or other probative evidence. 8 CFR 216.6(a)(4)(ii).

The immigrant investor must also establish that he or she sustained the investment throughout the period of his or her conditional permanent resident status. Under the regulations, an investor is deemed to have sustained the investment “if he or she has, in good faith, substantially met the capital investment requirement of the statute and continuously maintained his or her capital investment over the two years of conditional residence.” 8 CFR 216.6(c)(1)(iii). 6 USCIS-PM G.5 (citing to 8 CFR 216.6(a)(4)(iii)) provides examples of evidence that the immigrant investor may submit to establish that he or she sustained the qualifying investment:

Bank statements;
Invoices;
Receipts;
Contracts;
Business licenses;
Federal or state income tax returns; and
Federal or state quarterly tax statements.

Evidence of Job Creation, Job Maintenance in Troubled Business Cases

The job creation requirements are discussed in 6 USCIS-PM G.5.

In order to satisfy the job creation requirement, the conditional permanent resident immigrant investor must show either that his or her qualifying investment created at least 10 full-time positions for qualifying employees, or that these positions will be created within a reasonable time. There is a slight difference in how this requirement works for non-regional center investors and regional center investors. Non-regional center investors must show that the new commercial enterprise directly created the requisite full-time positions for qualifying employees. Regional center investors may show that the requisite creations were created directly or indirectly by the new commercial enterprise.

In the case of an immigrant investor who invested in a “troubled business,” as defined in the regulations at 8 CFR 204.6(j)(4)(ii), “the alien investor must submit evidence that the commercial enterprise maintained the number of existing employees at no less than the pre-investment level for the period following his or her admission as a conditional permanent resident.” 8 CFR 216.6(a)(4)(iv).

The USCIS-PM outlines three ways that a conditional resident investor my establish that he or she satisfied the job creation requirements for purpose of the removal of conditions — but note that the list is not exhaustive:

For direct jobs created as a result of the immigrant investor's investment, evidence such as payroll records, relevant tax documents, and Employment Eligibility Verification (Form I-9) showing employment by the new commercial enterprise;
For direct jobs maintained or created in a troubled business, evidence such as payroll records, relevant tax documents, and Form I-9 showing employment at the time of investment and at the time of filing the petition to remove the conditions on residence; or
For jobs created indirectly as a result of an investment in the regional center context, reasonable methodologies, including multiplier tables, feasibility studies, analyses of foreign and domestic markets for the goods or services to be exported, and other economically or statistically valid forecasting devices.

Using an Economic Input-Output Model in Regional Center Cases

Regional center investors may use the economic input-output model to establish that they satisfy the job creation requirements. The investor has the burden of establishing that the methodology being used is reasonable. In order to do this, the regional center investor must submit relevant documents with the Form I-829, “including the comprehensive business plan and economic impact analysis, if he or she is relying on such documents to meet his or her burden of proof.”

The USCIS provides that “[w]here the inputs into the model reflect jobs created directly at the new commercial enterprise or job-creating entity, the investor must demonstrate that the direct jobs input is reasonable.” The evidence required will vary depending on the facts of the particular case, but the USCIS suggests as examples “Form I-9, tax or payroll records.” If the jobs have not yet been created, the regional center investor may submit his or her comprehensive business plan as evidence, provided it details how many jobs will be created and when they will be created.

If the inputs in the regional center investor's model reflect expenditures, the investor bears the burden of establishing that the expenditures input is reasonable. The USCIS suggests submitting evidence such as “receipts and other financial records for expenditures that have occurred and a detailed projection of sales, costs, and income projections such as a pro-forma cash flow statement associated with the business plan for expenditures that will occur.”

Where the inputs in the model project revenues, the regional center investor must establish that the revenues input is reasonable. The USCIS suggests submitting evidence such as “tax or other financial records for revenues that have occurred or a detailed projection of sales, costs, and income projections such as a pro-forma income statement associated with the business plan for revenues that will occur.”

In General — All Jobs Do Not Need to Be Filled at Time of Filing Form I-829

The USCIS explains that it does not only consider jobs that are still in existence at the time the Form I-829 is filed in determining whether the immigrant investor satisfied the job creation requirement. “Instead, the job creation requirement is met if the investor can show that at least 10 full-time jobs for qualifying employees were created by the new commercial enterprise as a result of his or her investment and such jobs were considered to be permanent jobs when created.” Thus, if the investor establishes that his or her investment created a job that was considered to be permanent, but that position is not filled at the time the Form I-829 is filed, it may be counted toward the job creation requirement depending on the facts and circumstances of the particular case.

Allocating Jobs in Multiple Immigrant Investor Cases

The USCIS generally respects agreements made among immigrant investors with regard to identifying and allocating qualifying positions toward meeting the job creation requirement. 8 CFR 204.6(g)(2).

Where there is no such agreement, “[f]ull-time positions will be allocated to immigrant investors based on the date their petition to remove conditions was filed…”

As an example, the USCIS asks us to consider a new commercial enterprise that creates 25 jobs and has three immigrant investors associated with the enterprise. If the record is silent on how to allocate the 25 jobs, the first two immigrant investors to file the Form I-829 would be credited with 10 jobs each, assuming that the evidence submitted with their Forms I-829 satisfied their burden of proof. The third investor to file the Form I-829 would be credited with the remaining five jobs.

What Counts as a Full-Time Position

“The full-time employment criterion focuses on the position, not the employee.” For that reason, if the petition is filled by more than one employee, the position may still be considered a full-time position.

Positions that are “intermittent, temporary, seasonal, or transient in nature do not qualify as permanent full-time jobs.” If the job lasts for at least two years, however, it is not generally considered “intermittent, temporary, seasonal, or transient in nature.”

Certain types of jobs in the construction and tourism industry are often “intermittent, temporary, seasonal, or transient in nature.” However, the USCIS Policy Manual instructs adjudicators to not presumptively exclude such jobs because they fall into a certain industry. The inquiry should focus on the position, and whether the position described in a particular petition describes “continuous full-time employment.”

Jobs May Be Created “Within a Reasonable Time”

Under 8 CFR 216.6(a)(4)(iv), full time positions may be counted if they will be created within a reasonable time of the filing of the Form I-826.

The USCIS explains that while this regulation permits flexibility for the investor, “it is not an open-ended allowance,” especially bearing in mind that in order for the initial Form I-526 to have been approved, the USCIS must have determined that the petitioner established a likelihood of the requisite job creation within the 2-year conditional residency period.

Where the investor appeals to the “within a reasonable time provision,” the USCIS may determine whether a lengthier timeframe is reasonable in light of the totality of the circumstances. Circumstances that may weigh in an investor's favor recognize “the realities and unpredictability of starting a business venture.” Nevertheless, the USCIS will usually not credit jobs that are projected to be created more than three years after the immigrant investor's admission as an immigrant investor.

Flexibility to Account for Material Change

An immigrant investor may seek the removal of conditions even if he or she met the substantive requirements for the removal of conditions without entirely following the business plan submitted in support of the Form I-526. “USCIS does not deny petitions to remove conditions based solely on the failure to adhere to the business plan contained in the Form I-526 immigrant petition.” The USCIS provides, for example, that an immigrant investor may have availed him or herself to new business opportunities that were not accounted for in the business plan.

In accord with the foregoing principles, an immigrant investor may deploy his or her investment in ways not contemplated by the business plan submitted with the Form I-526, “as long as the further deployment otherwise satisfies the requirement to sustain the capital at risk.”

The USCIS must still find that the initial Form I-526 petition was filed in good faith, and that the investor fully intended to follow the business plan outlined in the initial EB5 petition. Even if the investor otherwise satisfies the EB5 criteria with a change in investment plan, the USCIS may deny the removal of conditions if it determines that the investor did not file the initial petition in good faith. In such cases, the USCIS may find that the initial petition was submitted to evade the immigration laws.

In order to show the USCIS that the change in investment course should not lead to the denial of the Form I-829, the investor must be able to demonstrate the following (quoted from the USCIS PM):

The required funds were placed at risk throughout the period of the petitioner's conditional permanent residence in the United States;
The required amount of capital was made available to the business or businesses most closely responsible for creating jobs (unless the job creation requirement has already been satisfied);
This at-risk investment was sustained throughout the period of the petitioner's conditional permanent residence in the United States; and
The investor created (or maintained, if applicable), or can be expected to create within a reasonable period of time, the requisite number of jobs.

In the Event of Regional Center Termination

If an immigrant investor's regional center is terminated between the approval of the Form I-526 and the filing of the Form I-829, the investor's conditional permanent resident status is not automatically terminated. The investor may still qualify for the removal of conditions if he or she can demonstrate compliance with EB5 statutes and regulations. Furthermore, the investor may still rely upon evidence of indirect job creation.

Extension of Conditional Resident Status While Form I-829 is Pending

The USCIS automatically extends conditional permanent resident status for one year after receipt of a properly filed Form I-829. INA 216A(c)(3)(D); 8 CFR 216.6(d)(2). The conditional permanent resident may use the Form I-829 receipt notice in conjunction with his or her permanent resident card as proof of continued conditional permanent resident status. If the Form I-829 is still unadjudicated within 30-days of the 1-year extension, the conditional permanent resident must take his or her receipt notice along with his or her conditional permanent resident card to the nearest USCIS field office for documentation showing continued status.

If the investor seeks review of the denial of the Form I-829 in removal proceedings, the USCIS will issue the investor a temporary Form I-551 until an order of removal becomes administratively final.

Conclusion

Establishing eligibility for removal of conditions as an immigrant investor is an evidence-intensive process, requiring proof that the investor satisfied the requisite investment and job creation or preservation criteria. Additional factors such as a material change in circumstance, regional center termination, or reliance on job creation “within a reasonable time” may make particular cases more complicated. Immigrant investors seeking removal of conditions should work with an experienced immigration attorney in the area of the EB5 immigrant investor program.