U.S. Citizenship and Immigration Services

MATTER OF A-C-S-, INC.

APPEAL OF TEXAS SERVICE CENTER DECISION

Non-Precedent Decision of the Administrative Appeals Office

DATE: APR. 11,2017

PETITION: FORM 1-140, IMMIGRANT PETITION FOR ALIEN WORKER

The Petitioner, a provider of software development and computer consulting services, seeks to employ the Beneficiary as a software developer. It requests classification of the Beneficiary as a professional under the third preference immigrant category. See Immigration and Nationality Act (the Act) section 203(b)(3)(A)(ii), 8 U.S.C. § 1153(b)(3)(A)(ii). This category allows a U.S. business to sponsor a professional with a bachelor's degree for lawful permanent resident status.

The Director of the Texas Service Center denied the petition, concluding that the record did not establish the Petitioner's ability to pay the proffered wage, as required.

On appeal, the Petitioner submits additional evidence and asserts that the wages it paid to the Beneficiary, its net current assets, and the totality of the circumstances demonstrate its ability to pay the proffered wage.

Upon de novo review, we will dismiss the appeal.

I. LAW AND ANALYSIS

A. The Employment-Based Immigration Process

Employment-based immigration generally follows a three-step prpcess. First, a prospective U.S. employer must obtain an approved ETA Form 9089, Application for Permanent Employment Certification (labor certification), from the U.S. Department of Labor (DOL). See section 212(a)(5)(A)(i) of the Act, 8 U.S.C. § 1182(a)(5)(A)(i). Next, the employer files Form l-140, Immigrant Petition for Alien Worker, with U.S. Citizenship and Immigration Services (USCIS). See section 204 of the Act, 8 U.S.C. § 1154. If the Form I-140 is approved, the foreign national may apply for an immigrant visa abroad or, if eligible, adjustment of status in the United States. See section 245 of the Act, 8 U.S.C. § 1255.

Matter of A-C-S-, Inc.

By approving the labor certification in this case, the DOL certified that U.S. workers are not able, willing, qualified, and available for the offered position of software developer. See section 212(a)(5)(A)(i)(J) of the Act. The DOL also certified that the Beneficiary's employment in the position will not hurt the wages and working conditions of U.S. workers in similar jobs. See section 212( a)(5)(A)(i)(II).

In these proceedings, USCIS must determine whether the Beneficiary meets the requirements of the offered position certified by the DOL. USCIS must also determine whether the Petitioner and the Beneficiary qualify for the requested immigrant classification, including whether the Petitioner has the ability to pay the proffered wage. See, e.g, Tongatapu Woodcrafi Haw .. Ltd. v Feldman, 736 F.2d 1305, 1309 (9th Cir. 1984) (holding that the immigration service "makes its own determination of the alien's entitlement to (the requested] preference status").

B. The Petitioner's Ability to Pay the Proffered Wage

A petitioner must demonstrate its continuing ability to pay a proffered wage from a petition's priority date until a beneficiary obtains lawful permanent residence. 8 C.F.R. § 204.5(g)(2). Evidence of ability to pay must include copies of annual reports, federal income tax returns, or audited financial statements. !d.

In this case, the labor certification states the proffered wage of the offered position of software developer as $110,000 per year. The petition's priority date is March 3, 2014. This is the date that the DOL accepted the labor certification application for processing. See 8 C.F.R. § 204.5(d) (explaining how to determine a petition's priority date).

In determining ability to pay, we first examine whether a petitioner paid a beneficiary the full proffered wage each year from a petition's priority date. If a petitioner did not pay a beneficiary the full proffered wage each year, we consider whether it generated sufficient annual amounts of net income or net current assets to pay any difference between the wages paid and the annual proffered wage. If the net income and net current asset amounts are insutlicient, we may also consider the overall magnitude of a petitioner's business activities. See Matter of Sonegawa. 12 I&N Dec. 612. 614-15 (Reg'l Comm'r 1967). 1

Here, the Petitioner asserts its employment of the Beneficiary since August 2007. The Petitioner states that another company temporarily employed him overseas from October 2014 to October 2015, before he returned to work for the Petitioner in the United States.

1 Federal courts have upheld our method of determining a petitioner's ability to pay a proffered wage. See, e.g, River St. Donuts, LLC v. Napolitano, 558 F.3d Ill, 118 (I st Cir. 2009); Estrada-Hernandez v. Holder, I 08 F. Supp. 3d 936, 942-43 (S.D. Cal. 2015); Rivzi v. Dep't of Homeland Sec., 37 F. Supp. 3d 870, 883-84 (S.D. Tex. 2014), (1/f'd, 627 Fed. App'x. 292 (5th Cir. 20 15).

2

Matter of A-C-S-, Inc.

The Petitioner submitted a copy of an Internal Revenue Service (IRS) Form W-2, Wage and Tax Statement, for 2014. The Petitioner asserts that the form demonstrates its payment to the Beneficiary that year of $84,936.13.

The Director credited the payment to the Petitioner. But the Form W-2 states its issuance by a company with a different name and different federal employer taxpayer identification number than the Petitioner. Without explanation, the form does not demonstrate payments to the Beneficiary by the Petitioner.

The record also contains copies of the Beneficiary's bi-weekly payroll records in 2014. The payroll records were issued under the names of both the Petitioner and the company listed on the Form W-2. But the payroll records do not explain the relationship between the Petitioner and the company.

If the company listed on the Form W-2 and payroll records is a payroll service or professional employer organization that issued payroll and tax documentation in its name to the Petitioner's employees in 2014, the Petitioner must submit documentary evidence of that arrangement. Because the record does not document a relationship between the Petitioner and the company listed on the materials, the record does not establish the Petitioner's claimed payment to the Beneficiary in 2014. Thus, the record does not establish the Petitioner's ability to pay the proflered wage based on wages paid to the Beneficiary.

The Petitioner submitted copies of it? federal income tax returns for 2014 reflecting annual net income of -$852,285.2 This amount does not equal or exceed the annual protlered wage, and therefore the record does not establish the Petitioner's ability to pay the proffered wage in 2014 based on net income.

The Petitioner's tax return for 2014 reflects net current assets of-$118,907. Because the Petitioner's net current assets do not equal or exceed the annual profiered wage, the record does not establish the Petitioner's ability to pay in 2014 based on its net current assets.

In response to the Director's request for-evidence, the Petitioner submitted an "Accountant's Compilation Report" and a letter from its accountant. The documents assert the Petitioner's generation of$137,623 in net income and $593,991 in net current assets in 2014. The accountant's letter states that the amounts differ from those listed on the Petitioner's 2014 tax return because the return was calculated using the /cash, rather than the accrual, accounting method.3

1 The tax returns indicate the Petitioner's treatment as an S corporation. S corporations that derive income credits or deductions from sources other than their trades or businesses reconcile their incomes on Schedules K of their IRS Forms 1120S, U.S. Income Tax Returns for S Corporations. See U.S. Internal Revenue Servs., Instructions to IRS Form 1120S, at https://www.irs.gov/pub/irs-pdf/i I I 20s.pdf (last visited Apr. 3, 20 17). In 2014, the Petitioner reported income adjustments from sources other than its business. We therefore consider lines I 8 of its Schedules K to reflect its annual net income amount in 20 I 4. 3

The cash method of accounting recognizes revenue upon its receipt, while the accrual method recognizes revenue when it is earned. See U.S. Internal Revenue Serv., Publication 538, Accounting Periods and Method\', at

3

Matter of A-C-S-, Inc.

The accountant's report, however, is insufficiently reliable to demonstrate the Petitioner's ability to pay the proffered wage in 2014. The report and the accountant's letter indicate that the report was unaudited. The financial information in the report therefore represents the assertions of the Petitioner's management. The record does not contain sut1icient evidence to corroborate the financial information in the report. Also, because of the Petitioner's submission of its 2014 tax returns to the IRS, the financial information on the tax returns is more reliable than the accountant's unsupported amendments to that information.

Thus, based on examinations of the Petitioner's payments to the Beneficiary and its annual amounts of net income and net current assets, the record does not establish the Petitioner's ability pay the proffered wage in 2014, the year of the petition's priority date.

On appeal, the Petitioner asserts that the wages paid to the Beneficiary demonstrate its ability to pay the proffered wage in 2014. From the petition's priority date of March 3, 2014, until the Beneficiary temporarily stopped working in the United States in September 2014, the Petitioner contends that it paid him at the rate of the $110,000 annual proffered wage.

As previously indicated, the Petitioner submitted copies of the Form W-2 and payroll records indicating the Beneficiary's receipt of $84,936.13 in 2014. Because the documents indicate their issuance by a company other than the Petitioner, however, the record does not establish the Petitioner as the Beneficiary's employer that year. The record therefore does not establish the Petitioner's claimed payment to the Beneficiary in 2014.

Even if the Petitioner paid the Beneficiary the amount on the Form W-2, the record would not establish the Petitioner's ability to pay the proffered wage in 2014. The amount on the Form W-2 is $25,063.87 less than the annual proffered wage of $110,000. Neither the Petitioner's annual amount of net income or net currents asserts in 2014 equals or exceeds the $25,063.87 difference.

Also, the record would not establish the Petitioner's ability to pay the prorated amount of $90,961.34, the portion of the 2014 proffered wage payable from the petition's March 3 priority date.4 From March 3 until the end of 2014, the record indicates that the Petitioner paid the Beneficiary $68,287.94.

The Petitioner further asserts on appeal that the Director neglected to consider the funds in its checking account when calculating its 2014 net current assets. The record contains copies of 2014 checking account statements showing monthly end balances of at least $32,361.69. But the current assets listed on the Petitioner's 2014 tax return that we considered presumably include the funds in the Petitioner's checking account. As the Petitioner states, current assets generally include assets that may be liquidated within a year, such as cash. See Joel G. Siegel & Jae K. Kim, Barron's

http://www.irs.gov/publications/p538/ar02.html (last visited Apr. 3, 20 17). 4

We calculated the prorated proffered wage of $90,961.34 by multiplying the weekly proffered wage of $2,115.38 by the 43 weeks that follow March 3 in 2014.

4

.

Matter of A-C-S-, Inc.

Dictionary of Accounting Terms, 118 (3d ed. 2000). The record does not indicate that the current assets listed on the Petitioner's 2014 tax return excluded the funds in its checking account. The record therefore does not establish the availability of the funds in the checking account to pay the proffered wage in 2014.

The Petitioner also submitted a copy of its federal income tax returns for 2015, showing a net income amount of$342,410. The net income amount for 2015 exceeds the annual proffered wage of $110,000. This would appear to demonstrate the Petitioner's ability to pay the proffered wage in 2015. However, USCIS records indicate the Petitioner's filing of at least five I-140 petitions since this petition's priority date of March 3, 2014.5

A petitioner must demonstrate its ability to pay the proffered wage of each petition it files from that petition's priority date. 8 C.F.R. § 204.5(g)(2). The Petitioner in this case must therefore demonstrate its ability to pay the combined proffered wages of the Beneficiary and the beneficiaries of its other petitions filed after this petition's priority date. The Petitioner must demonstrate its ability pay the combined proffered wages from this petition's priority date until the other beneficiaries obtained lawful permanent residence, or until their petitions were denied, withdrawn, or revoked. See Patel v. Johnson, 2 F.3d Supp. 108, 124 (D. Mass. 2014) (upholding our denial of a petition where a petitioner did not demonstrate its ability to pay multiple beneficiaries).

The record does not document the proffered wages of the Petitioner's other petitions, or whether it paid wages to any of the other beneficiaries. The record also does not indicate whether any of the other petitions were withdrawn, revoked, or denied, or whether any of the other beneficiaries obtained lawful permanent residence. Without this information, we are unable to determine the Petitioner's ability to pay the proffered wage.

As previously indicated and as the Petitioner asserts on appeal, we may consider a petitioner's ability to pay a proffered wage beyond its financial results. Under Sonegawa, we may consider such factors as: the number of years a petitioner has conducted business; its number of employees; the growth of its business; the occurrence of uncharacteristic expenses or losses; its reputation in its industry; a beneficiary's replacement of a current employer or outsourced service; or other evidence of its ability to pay.

In this case, the record indicates the Petitioner's continuous business operations since 1997 and its employment of 39 people. Copies of the Petitioner's federal income tax returns from 2010 through 2015 show increases in its annual amounts of gross revenues and salaries/wages paid. The record also establishes the Petitioner's possession of a good reputation in its industry, indicating its service to nationally known clients and the receipt of numerous business awards.

5 USCIS records identify the five petitions by the following receipt numbers:

and

5

,.

Matter of A-C-S-, Inc.

Similar to the petitioner in Sonegawa, which conducted business for 10 years "without any evidence of financial difficulties," Sonegawa, 12 I&N Dec. at 614, the Petitioner's tax returns indicate its profitability in all years from 2010 through 2015, except 2014. The Petitioner attributes its lackluster financial results that year to uncharacteristic expenses related to its acquisition of another company and its development of a new software product.

The Petitioner submitted copies of a press release and an asset purchase agreement, indicating its acquisition of another technology company, effective November l, 2014, for $100,000 and monthly "earn-out" payments. But other evidence of record casts doubt on the claimed acquisition. Specifically, the press release, dated January 1, 2015, states that the entities will combine and that "[t]ogether, over 150 employees will be dedicated to delivering solutions to meet clients' future needs." But the Petitioner's petition, which was dated and filed in April2015, states the company's employment of39, rather than 150, people. The Petitioner's tax returns also reflect a small drop in its annual amounts of salaries/wages paid from 2014 to 2015.

Further, online government records indicate that the company the Petitioner purportedly acquired remained a separate, active corporation until September 23, 2016. See Fla. Dep't of State, Div. of Corps., Corporation Search, at http://search.sunbiz.org/Inquiry/CorporationSearch!ByName (last visited Apr. 3, 2017). In addition, the Petitioner's 2014 tax return does not refer to the acquisition or indicate the Petitioner's payment of a $100,000 purchase price.

A petitioner bears the burden of establishing eligibility for a requested benefit. Section 291 of the Act, 8 U .S.C. § 1361. The Petitioner in this case must therefore explain the discrepancies of record regarding its claimed acquisition in November 2014. See Matter of Ho, 19 I&N Dec. 582, 591 (BIA 1988) (requiring a petitioner to resolve inconsistencies of record by independent, objective evidence pointing to where the truth lies).

The Petitioner also submits copies of client subscription agreements regarding an online health insurance platform that it developed. The Petitioner claims that software development and employee training expenses resulting from this new product contributed to its financial loss in 2014.

But one of the client subscription agreements is dated February 22, 2013, indicating the product's development before 2014. Also, the website of the Petitioner's healthcare division indicates the development of the software product by at least 2012, when a research company noted its effectiveness.

In addition, the Petitioner's 2014 tax return does not reflect inordinate amounts of software development or employee training expenses. The return contains a statement indicating $2,745,330 in combined expenses for "off shore development costs" and "employee, recruiting, training and development." The Petitioner's 2015 tax return reflects an even greater total of the same combined expenses ($3, 168,228), but records a $342,410 annual profit. The record therefore does not establish that software development and employee training expenses resulting from a new product contributed to the Petitioner's loss in 2014. Thus, unlike the petitioner in Sonegmva, the Petitioner in this case has not established the occurrence of uncharacteristic expenses or losses.

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Matter of A-C-S-. Inc.

Also unlike the petitioner in Sonegawa, the Petitioner here must demonstrate its ability to pay multiple beneficiaries. In addition, the record does not establish the Beneficiary's replacement of a current employee or outsourced service. Thus, based on the totality of the circumstances, the record does not establish the Petitioner's ability to pay the proffered wage pursuant to Sonegawa.

II. CONCLUSION

The record does not establish the Petitioner's continuing ability to pay the proffered wage from the petition's priority date onward. We will therefore affirm the Director's decision.

ORDER: The appeal is dismissed.

Cite as Matter of A-C-S-. Inc., ID# 205398 (AAO Apr. 11, 2017)