Chapter 4 - Ability to Pay

An employer filing an Immigrant Petition for Alien Workers (Form I-140) must establish that the job offered to the beneficiary is realistic.^[1] The petitioner’s ability to pay the proffered wage indicated on Form I-140 is one of the essential elements in evaluating whether the job offer is realistic.^[2]

Accordingly, for immigrant petitions that require an offer of employment,^[3] the employer must demonstrate its continuing ability to pay the required wage as of the priority date through the time the beneficiary becomes a permanent resident.^[4]

Many employers satisfy the ability to pay requirement by submitting the initial required evidence described below together with payroll records demonstrating that, during the relevant time period, they have been paying the employee at least the proffered wage.

A. Initial Required Evidence

In order to establish ability to pay, the petition must include copies of the petitioner’s annual reports, federal tax returns, or audited financial statements for each available year from the priority date.^[5] The only exception to this requirement is if a U.S. employer employs 100 or more workers, it may instead include a financial officer statement.^[6]

1. Annual Reports

Publicly traded companies of a certain size are required to submit annual reports to the U.S. Securities and Exchange Commission (SEC) on Form 10-K. The SEC Form 10-K provides an overview of the company’s business and includes its audited financial statements. These companies must also issue an annual report to shareholders, which contains the company’s audited financial data and is often a simplified version of the SEC Form 10-K. Either the SEC Form 10-K or the annual report to shareholders constitute an annual report under 8 CFR 204.5(g)(2). Annual reports of private companies are also acceptable but are most persuasive to establish a petitioner’s ability to pay when they contain audited financial data.

2. Federal Tax Returns

The petitioner’s business structure or entity classification election determines the applicable Internal Revenue Service (IRS) tax return form and filing deadline. Submitted tax returns should be complete, including all required schedules. At times, USCIS may request schedules, statements, attachments, and other supporting documentation when the submitted evidence does not establish the petitioner’s ability to pay. In addition, USCIS may request the submission of IRS-issued certified copies or transcripts of tax returns in certain circumstances, such as when the petitioner has amended its tax returns in the middle of USCIS’ adjudication of the petition or when there is a question about the information contained on the returns.

Appendix: Business Structures [6 USCIS-PM E.4, Appendices Tab] provides an overview of the most common business forms of petitioning employers and the tax forms they file with the IRS.

3. Audited Financial Statements

If the petitioner relies on financial statements to demonstrate ability to pay as initial evidence, the financial statements must be audited. Audited financial statements are financial statements that have been examined under an acceptable standard by an accountant authorized by the jurisdiction to perform the audit; for example, by a certified public accountant in accordance with generally accepted accounting principles (GAAP).^[7] Audited financial statements must be accompanied by an auditor’s report that states that the financial statements have been audited.^[8]

Audited financial statements are distinct from compiled or reviewed financial statements. Compiled and reviewed financial statements are less rigorous reviews of a client’s financial statements and therefore the petitioner may only use them to establish ability to pay when accompanied by the other initial required forms of evidence required by the regulation. The auditor’s report accompanying the financial statements states whether the financial statements have been audited, compiled, or reviewed.

There are four types of auditor’s reports that accompany audited financial statements: unqualified opinion, qualified opinion, adverse opinion, and disclaimer of opinion. Reports including an unqualified opinion are generally the most credible, reliable, and probative.

An unqualified opinion states that, in the opinion of the auditor, the financial statements are free of material misstatements and are presented fairly in accordance with GAAP.
A qualified opinion report states that, in the opinion of the auditor, the financial statements are presented fairly in accordance with GAAP, except for a specified qualification. A qualified opinion is generally issued when the auditor identifies a departure from GAAP or when the auditor could not audit one or more areas of the financial statements. Audited financial statements with a qualified opinion report may be credible, reliable, and probative to establish ability to pay, especially if the qualification does not relate to the net income or net current assets figures on the financial statements.^[9]
An adverse opinion report states that, in the opinion of the auditor, the financial statements are materially misstated and do not conform with GAAP. A disclaimer of opinion report states that the accountant is unable to form an opinion on the financial statements. Officers should review financial statements with adverse or disclaimer of opinion reports along with other ability to pay evidence to determine whether all of the evidence submitted establishes a petitioner’s ability to pay.

The mere submission of annual reports, federal tax returns, or audited financial statements does not establish ability to pay. USCIS must analyze the financial information contained in these documents to determine whether they present persuasive information demonstrating that the petitioner possessed the ability to pay the proffered wage on the priority date and continuing until the beneficiary obtains lawful permanent residence.

4. Financial Officer Statement

If the petitioner employs 100 or more workers, a statement from a financial officer of the organization may serve to establish ability to pay the proffered wage.^[10] The financial officer statement may be submitted in place of annual reports, federal tax returns, or audited financial statements.^[11] Detailed letters that explain the basis of the financial officer’s conclusion in terms of the company’s finances are the most probative. USCIS has the discretion to determine whether the statement is, by itself, sufficient to establish ability to pay.

Examples of when a statement from a financial officer alone might not be sufficient to establish ability to pay include, but are not limited to:

The petitioner has filed petitions on behalf of multiple beneficiaries to the extent that the ability to pay all of the salary obligations may be in question;^[12]
Evidence in the record reflects that the petitioner may have fewer than 100 employees;
The document is a copy of a letter dated several years before the filing date and has been submitted in support of other previously-filed petitions;
The letter is inconsistent with other evidence in the record or publicly available information, such as when the petition (or financial documentation if submitted) shows large losses or the petitioner is in bankruptcy proceedings;
The petition is filed by a successor-in-interest to the company that obtained the labor certification and the only evidence is a letter from a financial officer of the predecessor company to establish the successor’s ability to pay; and
The statement does not indicate that the signatory is a financial officer of the petitioner.

5. Examples of Other Evidence of Ability to Pay

The petitioner has the burden of establishing its continuing ability to pay the proffered wage. Ultimately, USCIS considers all evidence relevant to the petitioner’s financial strength and the significance of its business activities, whether listed in the regulation or related to other metrics.^[13]

In certain circumstances, the petitioner may submit or USCIS may request additional evidence, such as profit and loss statements, bank account records, or personnel records. For example, in a case involving a general partnership where the general partners are personally liable for the partnership’s obligations, additional evidence relating to the general partners, such as the partners’ personal tax returns, may be relevant.

The following subsections describe examples of evidence commonly submitted by petitioners to establish ability to pay.

Bank Account Statements

Bank statements show the amount in an account on a given date and do not identify if any funds may already be obligated for other purposes. Bank statements often reflect funds that were included on the tax return, annual report, or audited financial statements, such as taxable income or cash used in determining net current assets. If the petitioner submits all monthly statements since the priority date, the petitioner must establish that the amounts reported on the bank statements have not already been considered elsewhere, such as in a calculation of the petitioner’s net current assets, and must establish that such amounts reported on the bank statements reflect sufficient cash to establish ability to pay under the totality of the circumstances.

In the limited cases where USCIS may consider the personal assets and liabilities of an owner of the petitioner (for example, petitions filed by sole proprietors, general partners, or other natural persons), bank account statements may be probative of the petitioner’s ability to pay the proffered wage.

Personnel Records

Although not required initial evidence, USCIS may accept personnel records as corroborating evidence of an employee’s dates of employment and salary, and the petitioner’s number of employees and overall payroll. Personnel records may include, but are not limited to, employment contracts, salary and payroll documents, and attendance records. USCIS does not, however, consider wages paid to other employees as available to pay the proffered wage unless the beneficiary is replacing a former employee.

Income and Assets of Others

A legal entity generally has a separate existence from its shareholders, members, managers, officers, or owners. Generally, USCIS does not consider the financial resources of persons or entities that have no explicit legal obligation to pay the proffered wage, including a parent company, shareholders and officers of a corporation, members or managers of a limited liability company (LLC) (even if the LLC is taxed as a partnership or disregarded entity), and limited partners.^[14] An annual report, audited financial statement, or tax return of a parent company is more probative of a subsidiary’s ability to pay the proffered wage where the subsidiary’s financial data is presented separately within the document.

For sole proprietors and individual employers of domestic workers, there is no separate legal entity.^[15] Therefore, USCIS considers the employer’s adjusted gross income, minus their personal expenses, when determining net income; and their personal liquid assets, minus any financial encumbrances on those assets, when determining net current assets.

In addition, although certain partnerships have a separate legal entity from their partners, general partners (as opposed to limited partners) are personally liable for the debts of the business. Therefore, if a petitioning partnership does not have sufficient net income or net current assets to establish ability to pay the proffered wage, USCIS may also consider whether a general partner of the partnership is individually willing and able to pay the proffered wage using the same analysis of income and assets for sole proprietors and individual employers detailed above.

Appendix: Business Structures [6 USCIS-PM E.4, Appendices Tab] provides an overview of the most common business forms of petitioning employers, including information on how they are formed, their fundamental characteristics, and the tax forms they file with the IRS.

Credit Limits, Bank Lines, or Lines of Credit

Lines of credit and other forms of debt are an integral part of any business operation. Documentation demonstrating a petitioner’s access to credit may establish a baseline of creditworthiness, and under the totality of circumstances, may be considered as one piece of evidence in consideration of whether the petitioner has the ability to pay the proffered wage. In instances where a petitioner is relying upon credit limits, bank lines, or lines of credit to establish ability to pay, USCIS must evaluate the overall financial position of the petitioner to determine whether the employer is making a realistic job offer and has the overall financial ability to satisfy the proffered wage.^[16]

Comparable to the limit on a credit card, a line of credit that has not been drawn upon cannot be treated as cash or as a cash asset and would not be added to the petitioner’s net income or net current asset calculations. Any cash drawn upon from a line of credit or any other credit used should be reflected in the balance sheet provided in the tax return or audited financial statement (if available) and would be fully considered in the evaluation of the petitioner’s net current assets. If the petitioner wishes to rely on a line of credit as evidence of ability to pay, the petitioner should submit evidence that demonstrates the amount of the line of credit available and that the line of credit augments rather than weakens its overall financial position. Relevant evidence could include monthly statements.

B. Analysis

USCIS considers all evidence relevant to the petitioner’s financial strength and the significance of its business activities, whether listed in the regulation or related to other metrics.^[17]

1. Employment of the Beneficiary

If the petitioner establishes by documentary evidence that it has paid the beneficiary a salary equal to or greater than the proffered wage for each year from the priority date, the evidence may establish the petitioner’s ability to pay.

The wage paid to the beneficiary is generally established with:

Wage and Tax Statement (IRS Forms W-2);
Miscellaneous Income (IRS Forms 1099-MISC); or
State wage and withholding reports that list the individual employee.

Even if the petitioner establishes that it has paid the beneficiary a salary that meets or exceeds the proffered wage, the petition must still contain an annual report, federal tax return, or audited financial statements for each year from the priority date or, for petitioners who employ 100 or more workers, a financial officer statement.^[18] Payments that do not compensate the beneficiary through wages, such as those made to health insurers for benefits or housing allowances (unless on the labor certification and advertised), are not part of the wages paid to the beneficiary.

2. Net Income and Net Current Assets

Net income (also called net profit or ordinary income, depending on the corporate structure) consists of revenues less all expenses^[19] over a period of time. Where the petitioner’s net income over the relevant period is equal to or exceeds the proffered wage, the petitioner generally demonstrates its ability to pay that wage. USCIS does not add back depreciation.^[20]

As a separate consideration, net current assets are the difference between the petitioner’s current assets and current liabilities. Current assets consist of items having (in most cases) a life of 1 year or less, such as cash, marketable securities, inventory and prepaid expenses.^[21] Current liabilities are obligations payable (in most cases) within 1 year, such as accounts payable, short-term notes payable, and accrued expenses.^[22] Where the petitioner shows net current assets during the relevant period that are equal to or exceed the proffered wage, the petitioner has generally demonstrated its ability to pay that wage. USCIS generally does not consider total assets because total assets must be balanced by the petitioner’s liabilities and total assets may include assets that are not easily converted into cash in order to pay the proffered wage.

USCIS does not add net income to net current assets in determining a petitioner’s ability to pay since net income represents the sum of income remaining after all expenses were paid over a period of time, such as a fiscal year, whereas net current assets denote a specific moment in time. Therefore, the two metrics cannot be combined to establish a petitioner’s ability to pay the proffered wage.

If the petitioner has paid the beneficiary an amount that is less than the proffered wage, then the petitioner need only demonstrate that its net income or net current assets are equal to or greater than the difference between the proffered wage and the actual wage paid.

Net income and net current assets are generally calculated using a petitioner’s federal income tax returns. See Appendix: Business Structures [6 USCIS-PM E.4, Appendices Tab] for the most common business forms of petitioning employers and the tax forms they file with the IRS.

Example

The priority date is January 1, 2009. The proffered wage is $50,000. In addition to the petitioner’s federal tax returns, the record contains IRS Forms W-2 demonstrating that the petitioner paid the beneficiary a $40,000 salary in 2009 and 2010. The petitioner can establish its ability to pay for 2009 and 2010 if its federal tax returns show either net income or net current assets equal to or greater than $10,000 for each year.

3. Other Factors

The ability to pay analysis is more nuanced than simply reviewing wages paid, net income, and net current assets. The petitioner may submit, or USCIS may request, additional evidence of the petitioner’s ability to pay the proffered wage, including, but not limited to, profit or loss statements, bank account records, or personnel records.^[23] Any additional evidence submitted must establish, when considered with the required initial evidence, the petitioner’s ability to pay. Additional evidence of the petitioner’s ability to pay the proffered wage must be credible and relevant.

Sometimes companies operate at a loss for a period to improve their business position in the long run. For example, a company may not expect research and development costs on a product line to generate revenue for several years. In those instances, the documentation should fully explain the sources of funding for the entity (or unit) and the expected profit potential. Whether the petitioner can demonstrate it has the ability to pay the beneficiary the wages described in the petition depends on the specific facts presented and consideration of all of the circumstances.

The following factors are among the others USCIS may consider in its totality of the circumstances analysis:

The petitioner’s gross sales and gross revenues;
The total wages paid to the petitioner’s current employees during the most recent fiscal years;
Media accounts about the petitioner’s business;
The number of years the petitioner has been doing business;
The historical growth of the petitioner’s business;
Any recent changes that may have disrupted or interrupted its business (for example, reorganization, merger, bankruptcy);
The petitioner’s number of employees;
The occurrence of any uncharacteristic business expenditures or losses from which the petitioner has since recovered (for example, extensive fire or flood damage); and
The petitioner’s overall reputation within its industry.

In some cases, such as when a petitioner has one unprofitable year despite a history of profitability, these factors may establish a petitioner’s ability to pay the proffered wage despite a shortfall in net income or net current assets. As another example, USCIS may also take into account that the beneficiary is replacing a former employee or outsourced service or that an officer of the petitioning employer is willing and able to forego compensation specifically to cover the wage.

C. Additional Ability to Pay Issues

1. Prorating the Proffered Wage in the Priority Date Year

The petitioner may request that the proffered wage be prorated for the applicable portion of the priority date year. In addressing such a request, USCIS does not consider 12 months of net income towards its ability to pay the proffered wage for a period of less than 12 months. In this scenario, USCIS may prorate the proffered wage if the record contains evidence of net income or payment of the beneficiary’s wages specifically covering the portion of the year that occurred after the priority date, or both. USCIS may also consider the petitioner’s net current assets at the end of the priority date year towards the prorated wage.^[24]

Example

The priority date is July 1, 2021. The annual proffered wage is $100,000. The petitioner established that it paid the beneficiary wages between July 1, 2021 and December 31, 2021 in the amount of $15,000. The petitioner also documented that its net income between July 1, 2021 and December 31, 2021 is $25,000. The net current assets shown on balance sheet of the petitioner’s 2021 federal tax return is $40,000.

Based on the above facts, the prorated wage is $50,000. If the petitioner requests that USCIS consider the prorated wage, it would have to show its ability to pay the prorated wage deficiency of $35,000, which is the difference between the prorated wage and the wages paid by the petitioner to the beneficiary during the prorated period from July 1, 2021 to December 31, 2021. Its net income of $25,000 during the prorated period is insufficient to pay the wage deficiency. USCIS does not combine prorated net income with net current assets. However, on December 31, 2021, the petitioner had sufficient net current assets to pay the prorated wage deficiency. USCIS does not prorate net current assets. Therefore, the petitioner in this example could establish its ability to pay the prorated wage deficiency of $35,000 for the priority date year based on its net current assets of $40,000.

2. Multiple Beneficiaries

If the petitioner has filed Form I-140 petitions on behalf of other beneficiaries, there may be a question as to whether the petitioner can meet the ability to pay obligation on all petitions. However, this analysis may not be necessary if the petitioner has paid the beneficiary of the petition a salary equal to or greater than the proffered wage since the priority date, and submitted the required regulatory evidence.^[25] Conversely, if the petitioner cannot demonstrate an ability to pay the beneficiary of the petition under review, the officer does not need to consider the issue of an ability to pay multiple beneficiaries.

In cases with multiple Form I-140 beneficiaries, where a petitioner with 100 or more employees provides a letter from a financial officer,^[26] the officer balances the evidence in the record to determine whether to use discretion to accept the letter as evidence of a petitioner’s ability to pay the proffered wages.

In cases necessitating analysis of the ability to pay multiple beneficiaries, the petitioner must demonstrate its ability to pay the proffered wages for each beneficiary for each year starting from the priority date of the petition under review. However, USCIS does not consider the petitioner’s ability to pay the proffered wage of another Form I-140 beneficiary:

After the other beneficiary obtains lawful permanent residence;
If the employer withdrew the Form I-140 petition filed on behalf of the other beneficiary;
If USCIS denied or revoked the approval of the Form I-140 petition filed on behalf of the other beneficiary without a pending appeal or motion; or
Before the priority date of the Form I-140 petition filed on behalf of the other beneficiary.

The analysis to determine the ability to pay the combined wages is the same as that for a single beneficiary, including taking into account wages paid to any of the beneficiaries.

Evidence to support a petitioner’s ability to pay the proffered wage for multiple beneficiaries may include, but is not limited to, the following:

A list of all receipt numbers for the Form I-140 petitions that were pending, or approved as of, or filed after, the priority date of the current petition;
The name of each beneficiary;
The proffered wage for each beneficiary;
The priority date of each petition;
The status of each petition and the date of any status change (that is, pending, approved, denied, withdrawn, revoked, on appeal or motion, beneficiary obtained lawful permanent residence); and
Documentary evidence of any wages paid to each beneficiary for each year starting from the priority date of the current Form I-140 petition or the priority date of the Form I-140 petition filed on behalf the other beneficiary, whichever is later. Such evidence may include:
- Wage and Tax Statement (IRS Form W-2);
- Miscellaneous Income (IRS Form 1099-MISC);
- State wage and withholding reports; and
- Pay vouchers or payroll records that specify the length of the pay periods and show gross or net pay, year-to-date income, income tax deductions, and tax withheld.

Officers should also conduct a totality of the circumstances analysis in each case where ability to pay involves multiple beneficiaries.^[27]

3. Successors-in-Interest

A petition filed by a successor-in-interest must establish, among other things, that the predecessor entity possessed the ability to pay the proffered wage from the priority date until the transfer of ownership to the successor, and the successor has possessed the ability to pay the proffered wage from the date of the transfer of ownership onwards.^[28]

4. Non-Profit Organizations

Certain non-profit organizations are exempt from income taxation under the Internal Revenue Code. Nonetheless, tax-exempt non-profit organizations are generally required to file annual returns of their income and expenses on a Return of Organization Exempt from Income Tax (IRS Form 990 or IRS Form 990EZ). Churches and certain church-related organizations may be exempt from filing IRS Form 990. If a non-profit organization does not have tax returns, it must still provide annual reports, audited financial statements, or, for organizations with 100 or more employees, a financial officer statement, to establish its ability to pay the proffered wage.

See Section E of Appendix: Business Structures [6 USCIS-PM E.4, Appendices Tab] for more information on non-profit organizations.

Footnotes

[^ 1] See Matter of Great Wall (PDF), 16 I&N Dec. 142, 144 (Acting Reg. Comm. 1977).

[^ 2] See Matter of Great Wall (PDF), 16 I&N Dec. 142, 144-45 (Acting Reg. Comm. 1977).

[^ 3] Immigrant petitions that require an offer of employment include outstanding professor or researcher, multinational executive or manager, advanced degree professional or person of exceptional ability (except when seeking a national interest waiver of the job offer and, thus, the labor certification), skilled worker, professional, and other worker. For additional information on these classifications, see Part F, Employment-Based Classifications [6 USCIS-PM F].

[^ 4] See 8 CFR 204.5(g)(2). The petitioner’s ability to pay is separate from the statutory affidavit of support requirements in family-based petitions. See INA 213A. Therefore, any executed Affidavit of Support Under Section 213A of the INA (Form I-864 or Form I-864EZ), is not required as supporting evidence for a Form I-140, and does not document the petitioner’s ability to pay the proffered wage.

[^ 5] See 8 CFR 204.5(g)(2). USCIS reviews ability to pay as part of the Form I-140 petition adjudication, but can reexamine ability to pay in post-adjudication proceedings, given the employer’s obligation to maintain their ability to pay until the beneficiary obtains lawful permanent residence. In the event that a tax return, annual report, or audited financial statement is not available for the priority date year at the time of filing, USCIS may consider one of these three documents for the year before the priority date as part of the totality analysis discussed in Section B, Analysis [6 USCIS-PM E.4(B)].

[^ 6] See Subsection 4, Financial Officer Statement [6 USCIS-PM E.4(A)(4)].

[^ 7] See the Federal Accounting Standards Advisory Board Standards & Guidance webpage.

[^ 8] The Financial Accounting Standards Board and the Governmental Accounting Standards Board are responsible for ensuring that GAAP is a high-quality benchmark of financial reporting. See the Financial Accounting Foundation’s About GAAP webpage.

[^ 9] See the Financial Accounting Foundation’s About GAAP webpage.

[^ 10] See 8 CFR 204.5(g)(2).

[^ 11] Any employee authorized to manage and oversee the financial actions of an organization, or delegate if within the financial hierarchy of the organization, may be a financial officer. The formal title of such financial officer depends on the organization. Common names that identify a company’s financial officer include, but are not limited to, chief financial officer, principal financial officer, vice president of finance, chief accounting officer, treasurer, comptroller, or financial director.

[^ 12] For more information as to how officers balance all of the evidence, including relevant factors, see Section C, Additional Ability to Pay Issues, Subsection 2, Multiple Beneficiaries [6 USCIS-PM E.4(C)(2)].

[^ 13] See Matter of Sonegawa (PDF), 12 I&N Dec. 612 (Reg. Comm. 1967). For information on how USCIS analyzes additional evidence, see Section B, Analysis [6 USCIS-PM E.4(B)].

[^ 14] See Matter of Aphrodite Investments Limited (PDF), 17 I&N Dec. 530 (Comm. 1980) (finding that a corporation is a separate and distinct legal entity from its owners or stockholders). In addition, see Sitar Restaurant v. Ashcroft, No. CIV.A.02-30197-MAP (D. Mass. Sept. 18, 2003) (finding that nothing in the governing regulation requires USCIS to consider the financial resources of persons or entities who have no legal obligation to pay the wage).

[^ 15] An LLC with only one member is generally not considered separate from its owner for income tax purposes. See IRS’s Single Member Limited Liability Companies webpage. However, since the single member of the LLC is not personally liable for for the debts of the business, they do not have a legal obligation to pay the proffered wage. For this reason, USCIS does not consider the personal assets and liabilities of the member of a single-member LLC.

[^ 16] See Matter of Great Wall (PDF), 16 I&N 142, 144-45 (Acting Reg. Comm. 1977).

[^ 17] See Matter of Sonegawa (PDF), 12 I&N Dec. 612 (Reg. Comm. 1967).

[^ 18] See 8 CFR 204.5(g)(2).

[^ 19] See Joel G. Siegel and Jae K. Shim, Barron’s Dictionary of Accounting Terms (Barron’s Educational Series, Inc. 2000), p. 293.

[^ 20] See River Street Donuts, LLC v. Napolitano, 558 F.3d 111 (1st Cir. 2009) (holding that USCIS did not abuse its discretion in excluding employer’s depreciation deductions from its net income in determining that it did not have financial ability to employ a foreign skilled worker).

[^ 21] See Joel G. Siegel and Jae K. Shim, Barron’s Dictionary of Accounting Terms (Barron’s Educational Series, Inc. 2000), p. 117.

[^ 22] See Joel G. Siegel and Jae K. Shim, Barron’s Dictionary of Accounting Terms (Barron’s Educational Series, Inc. 2000), p. 118.

[^ 23] See 8 CFR 204.5(g)(2).

[^ 24] USCIS does not prorate net current assets. Net current assets on a balance sheet are a snapshot of a business’ current assets and current liabilities on a specific date. This amount represents what a petitioner could liquidate on that date to pay the prorated proffered wage. In contrast, net income covers a specific period of time and therefore must be prorated for the same period as the prorated proffered wage. As an example, when prorating net income, USCIS may consider monthly income statements. Stated another way, unlike with income statements, the accounts on the balance sheet (for example, assets and liabilities) are not closed out at the end of the accounting period. Instead, they are carried forward and become the starting balances at the beginning of the next period.

[^ 25] A substantially increased total labor expense of multiple beneficiaries may potentially impact the petitioner’s ability to continue to pay existing employees.

[^ 26] See 8 CFR 204.5(g)(2). See Section A, Initial Required Evidence, Subsection 4, Financial Officer Statement [6 USCIS-PM E.4(A)(4)].

[^ 27] See Matter of Sonegawa (PDF), 12 I&N Dec. 612 (Reg. Comm. 1967).

[^ 28] For more information, see Chapter 3, Successor-in-Interest in Permanent Labor Certification Cases [6 USCIS-PM E.3].

Resources

20 CFR 656 - Labor Certification Process for Permanent Employment of Aliens in the United States

8 CFR 204.5(a)-(l), (n) - Petitions for employment-based immigrants

8 CFR 204.5(g)(2) - Ability of prospective employer to pay wage

8 CFR 204.5 - Petitions for employment-based immigrants

INA 201 - Worldwide level of immigration

INA 202 - Numerical limitations on individual foreign states

INA 203 - Allocation of immigrant visas

INA 203(b)(1), (2), (3) - Preference allocation for employment-based immigrants

INA 203(b)(2) - Aliens who are members of the professions holding advanced degrees or aliens of exceptional ability

INA 203(b)(3) - Skilled workers, professionals, and other workers

INA 204, 8 CFR 204 - Procedure for granting immigrant status

ETA Form 9089, Application for Permanent Employment Certification (PDF)

Form ETA-9141, Application for Prevailing Wage Determination (PDF)

G-28, Notice of Entry of Appearance as Attorney or Accredited Representative

I-140, Immigrant Petition for Alien Worker

I-290B, Notice of Appeal or Motion

I-485, Application to Register Permanent Residence or Adjust Status

How to Use the USCIS Policy Manual Website (PDF, 2.99 MB)

Appendices

This appendix provides a general overview of the most common business forms or structures of petitioning employers, agents, or sponsors filing an Immigrant Petition for Alien Workers (Form I-140) or Petition for Nonimmigrant Worker (Form I-129). These forms or structures are also relevant to the new commercial enterprises underlying an Immigrant Petition by Standalone Investor (Form I-526) or Immigrant Petition by Regional Center Investor (Form I-526E).

This appendix includes information on how different types of businesses are formed, their fundamental characteristics, the various tax forms that each business organization files with the Internal Revenue Service (IRS), and basic tax terms. Generally, each business form or structure discussed in this appendix should have an Employer Identification Number (EIN), sometimes also called a Federal Tax Identification Number, or IRS Tax Number.^[1] An EIN is used to identify a business entity for IRS purposes.

State law generally governs the formation, operation, and dissolution of business entities. As each state has its own rules for business entities, an officer should refer to the relevant state statute or state authority’s website (such as the California Secretary of State’s Business Programs Division) if there is a specific question about a particular business entity.

A. Sole Proprietorship

1. Definition

A sole proprietorship is a for-profit business owned by one person (or a married couple, in some cases).^[2] A sole proprietorship is “a business in which one person owns all the assets, owes all the liabilities, and operates in his or her personal capacity.”^[3] Owners may operate on their own or may employ other people. The sole proprietorship is the simplest business form under which a person can operate a business. It is not a separate legal entity from its owner;^[4] for example, the owner remains responsible for the business debts.

A sole proprietorship can operate under the name of its owner or it can elect to do business under a fictitious name. The fictitious name is simply a trade name and does not create a legal entity separate from the sole proprietor owner.^[5]

2. Taxes

Income from the business is included on the owner’s personal income tax return, U.S. Individual Income Tax Return (IRS Form 1040). The profits and losses of the business are recorded and attached to the Form 1040 on Profit or Loss From Business (Schedule C); Supplemental Income or Loss (Schedule E); or Profit or Loss From Farming (Schedule F).

The owner’s adjusted gross income on Form 1040 is used as net income for ability to pay purposes; however, there are no tax forms that list the business’s current assets and liabilities. When determining a petitioner’s ability to pay the proffered wage, USCIS also considers a sole proprietor’s liquefiable personal assets as well as household expenses and other personal liabilities (such as rent, car payments, and child care expenses).

B. Partnership

A partnership is the relationship between two or more persons or entities who join to carry on a trade or business.^[6] Each person or entity contributes to the partnership something of value (for example, money, property, labor, or skill) and expects to share in the profits and losses of the business.^[7]

A partnership is created automatically when two or more persons or entities engage in a business enterprise for profit whether or not the persons or entities intend to form a partnership.^[8] Partners seeking increased accountability, however, may opt to have their arrangement memorialized in a partnership agreement. The following subsections provide an overview of the most common forms of partnerships. The type of partnership is identified at Schedule B, Line 1 of U.S. Return of Partnership Income (IRS Form 1065).

1. General Partnership

A general partnership is the simplest form of partnership, and as such, general partnerships are simply called partnerships.^[9] In a general partnership, all partners or owners may equally share responsibilities and liabilities.

A general partnership has the following characteristics:

A general partnership is created through an express or implied agreement;^[10]
A general partnership has two or more partners;^[11] and
The owners or partners, which may be other types of entities (such as a corporation or limited liability company), are all liable for all legal actions and debts the company faces.^[12]

2. Limited Partnership

A limited partnership^[13] is very similar to a general partnership, except that the partnership is partially owned by one or more limited partners and is managed exclusively by its general partner(s).^[14]

A limited partnership must have at least one general partner. The general partner, often another type of entity (typically a corporation or limited liability company), has management powers, the right to use partnership property, and is personally liable for the debts of the partnership.^[15]

Conversely, limited partners do not participate in the management of the business and are generally liable for the partnership’s debts only to the extent of their contributed investment. Limited partnerships permit a person to invest in a partnership while limiting their liability and involvement in its management. In general, a formal written agreement is required to create a limited partnership.^[16]

3. Limited Liability Partnership

In a limited liability partnership (LLP),^[17] all partners have limited liability similar to that of limited partners in a limited partnership, but without the limitations on control over the company.^[18] Some states limit usage of LLPs to certain professions (for example, lawyers).^[19]

4. Limited Liability Limited Partnership

A limited liability limited partnership (LLLP) is a modification of the limited partnership.^[20] Similar to a limited partnership, the LLLP consists of one or more general partners and one or more limited partners.^[21]

In general, the key features of an LLLP are:

The general partners manage the business operations of the LLLP, while the limited partners typically only maintain a passive financial interest;
It is designed to offer limited liability to all partners in the partnership; and
The partners decide the structure of the organization and the distribution of profits and losses. States usually recommend the partners establish a formal, written partnership agreement.^[22]

Not every state allows the formation of or recognizes LLLPs.

5. Taxes

The IRS generally considers partnerships to be pass-through tax entities, which means that the partnership itself does not pay income taxes and all of the profits and losses of the partnership pass through the business to the partners, who pay taxes on their share of the profits (or deduct their share of the losses) on their individual income tax returns.^[23] Each partner may share in the profits and losses of the partnership equally, or in proportion to their respective contributions to the partnership or as otherwise set out in a written partnership agreement.

Even though the partnership itself does not pay income taxes, it must file U.S. Return of Partnership Income (IRS Form 1065). This form is an informational return the IRS reviews to determine whether the partners are reporting their income correctly.^[24] Net income or loss (notated on tax forms as ordinary business income (loss))^[25] is found on IRS Form 1065 or Schedule K and net current assets are calculated from information on Schedule L.

C. Corporation

A corporation is a created by filing articles of incorporation with a state. In the eyes of the law, a corporation is a distinct body separate from its owners and management. Accordingly, a corporation is entitled to all legal rights afforded to individual persons, such as the ability to bring and defend lawsuits or to buy and sell property. The corporation’s most notable feature is that, subject to narrow exceptions, it protects its owners (shareholders) from personal liability for its debts and obligations.^[26] A corporation also has directors and officers who run the business.

A corporation has perpetual life. When a shareholder dies or otherwise elects to leave a corporation, the shareholder can transfer their stock to others. Corporate shareholders own the corporation, the board of directors manages the corporation through their direction and control of its officers, and, in almost all cases, the officers oversee the day-to-day operations of the corporation. The shareholders elect the directors, who in turn appoint the corporate officers. Often, particularly in smaller corporations, the same person might serve multiple roles within a corporation: shareholder, director, and officer.^[27]

A corporation’s shareholders, directors, and officers must observe particular formalities in a corporation’s operation and administration.^[28] For example, corporations must, on at least an annual basis, make decisions regarding a corporation’s management by formal vote and must record those votes in the corporate minutes. Meetings of shareholders and directors must be properly noticed and must meet quorum requirements. Finally, corporations must meet annual reporting requirements in their state of incorporation and in states where they do significant business.^[29]

1. Subchapter C Corporations

Corporations that have not elected to be taxed as a subchapter S corporation are by default taxed as a C corporation under Subchapter C of Chapter 1 of the Internal Revenue Code (IRC) where the general tax rules affecting corporations and their shareholders are located.^[30]

Taxes^[31]

A C corporation files U.S. Corporation Income Tax Return (IRS Form 1120). C corporations (and other entities electing to be taxed as C corporations) are the only type of businesses that must pay income taxes on profits.^[32] The subsections below discuss how other corporations file and pay their taxes.

Generally, a C corporation’s taxable profits consist of money kept in the company to cover expenses or expansion (called retained earnings) and profits that are distributed to the owners (shareholders) as dividends. These dividends are taxed twice, as the shareholders also pay taxes on these amounts.^[33] Net income (taxable income before net operating loss deduction and special deductions) appears on the IRS Form 1120 or 1120-A, while net current assets are calculated from information on Schedule L of IRS Form 1120 or 1120-A.

To reduce taxable profits, a C corporation can deduct many of its business expenses that the C corporation spends in the legitimate pursuit of profit.^[34]

2. Subchapter S Corporations

The subchapter S corporation is a variation of the standard subchapter C corporation. The rules for subchapter S corporations are found in the IRC^[35] and provide many of the benefits of partnership taxation while at the same time giving the owners limited liability protection from creditors.

An S corporation has the same corporate structure as a standard C corporation. It is a legal entity, chartered under state law, separate from its shareholders and officers, and there is generally limited liability for corporate shareholders. The difference is that the S corporation files an election on Election by a Small Business Corporation (IRS Form 2553), to be treated differently for federal tax purposes.

As with partnerships, the income, deductions, and tax credits of an S corporation flow through to shareholders annually, regardless of whether distributions (dividends) are made. Therefore, income is taxed solely at the shareholder level and not at the corporate level. To qualify for S corporation status, the corporation must meet certain requirements.^[36]

Taxes

An S corporation files U.S. Income Tax Return for an S Corporation (IRS Form 1120-S). The corporate income flows through and is reported on the shareholders’ individual tax returns. The corporation completes and files a Shareholder’s Share of Income, Deductions, Credits, etc. (Schedule K-1) with IRS Form 1120-S for each shareholder. The Schedule K-1 tells shareholders their allocable share of corporate income and deductions.

Shareholders must pay tax on their share of corporate income, regardless of whether it is actually distributed. Net income or loss, notated on tax forms as ordinary business income (loss),^[37] appears on the IRS Form 1120-S or its Schedule K, while net current assets are calculated from information on Schedule L.

3. Personal Service Corporation

A personal service corporation is a corporation where the employee-owners are engaged in the performance of personal services. The IRC defines personal services as services performed in the fields of health, law, engineering, architecture, accounting, actuarial science, performing arts, and consulting.^[38]

To qualify as a personal service corporation, substantially all the corporation’s activities must involve the performance of personal services, and a percentage of the corporation’s stock must be owned by employees performing the personal services.^[39]

Taxes

A personal service corporation pays tax on its profits as a corporate entity. However, a personal service corporation is not allowed to use the graduated tax rates for other C corporations. Instead, it is subject to a flat tax based on the highest corporate tax rate. Because of the high tax rate, personal service corporations generally distribute their profits as wages to the employee-shareholders. In turn, the employee-shareholders pay personal taxes on their wages.^[40]

The personal service corporation files its taxes on IRS Form 1120. This form contains a box for the business to indicate that it is a personal service corporation.^[41] Net income or loss is notated on IRS Form 1120 or 1120-A as taxable income before net operating loss deduction and special deductions, while net current assets are calculated from information on IRS Form 1120 Schedule L.

D. Limited Liability Company

A limited liability company (LLC) is a hybrid entity, combining some of the most advantageous features of partnerships and corporations.^[42] LLCs were created to provide business owners with the liability protection that corporations enjoy without the double taxation. Under the default tax standard, earnings and losses of an LLC pass through to the owners and are included on their personal tax returns.^[43]

LLCs are similar to S corporations, except that LLCs are not limited in the number of owners or types of members.^[44] LLCs may be either member-managed (managed by each of its members) or manager-managed (managed by specified managers who may or may not be members of the LLC).^[45] The LLC’s operating agreement may distinguish between members and managing members. Generally, if such a distinction is made, managing members of the LLC are allowed a full participatory role in the business’s operation. However, depending on the operating agreement, even regular members may have a role in the business’s operation.

To set up an LLC, organizers file articles of organization with the secretary of state in the state where the LLC is formed. Some states also require the filing of an operating agreement, which is similar to a partnership agreement. LLCs do not necessarily have perpetual life and can be set up to dissolve after a set period of time, such as a specific number of years, upon the occurrence of a triggering event, such as the death or withdrawal of a member, or as otherwise provided in the operating agreement.

The IRS does not recognize an LLC as a classification for federal tax purposes and by default treats multi-member LLCs as a partnership and single-member LLCs as a disregarded entity (similar to a sole proprietorship) for tax purposes. As with other entities, however, an LLC may file an election to be taxed differently (such as a corporation).^[46]

1. Taxes

For federal income tax purposes, LLCs with two or more members are treated by default as partnerships (a pass-through entity) and must file the IRS Form 1065, discussed above under Section B, Partnership. Each partner receives a Partner’s Share of Income, Deductions, Credits, etc. (Schedule K-1) for their share of income or losses to be reported on that partner’s individual tax return.

If there is only one member in the LLC, it is treated as a disregarded entity (similar to a sole proprietorship) for tax purposes, and the owner reports the LLC’s income on the owner’s personal individual tax return on Schedules C, E, or F to the IRS Form 1040, discussed above under Section A, Sole Proprietorship.

As an option, LLCs may also elect to be taxed like a corporation by filing Entity Classification Election (IRS Form 8832). They can be treated as a regular C corporation (taxation of the entity’s income before any dividends or distributions to the members and then taxation of the dividends or distributions once received as income by the members), or as an S corporation. These corporations file IRS Form 1120 or 1120-S, discussed above under Section C, Corporation.

E. Non-Profit Organization

1. Overview

A non-profit organization (NPO) is an entity that serves some public purpose and therefore enjoys special treatment under the law, including often having tax-exempt status and the protection of directors, officers, and members from personal liability.^[47] Typically, NPOs are engaged in charitable, educational, religious, or artistic activities of public or private interest.^[48] Unlike a for-profit business entity, an NPO does not distribute profits to its owners.^[49] Instead, any profits must ultimately go back into the organization.

In general, an NPO is formed and governed under state statutes the same as other entity types, and often takes the form of nonprofit corporations or LLCs. Whether incorporated or unincorporated, an NPO must keep records, prepare minutes of meetings, and have a separate bank account.

The board of directors typically makes collaborative decisions regarding the operation of the NPO. The board defines the mission and the policies of the NPO, creates budgets and oversees finances, and hires an executive director. If the NPO has an executive director, the director carries out the daily functions of the NPO under the management of the board. The executive director’s job is also to advise and report information to the board about activities and programs, and to monitor finances.

2. Taxes

An incorporated or unincorporated NPO can qualify for tax-exempt status if it meets certain conditions. In most states, if an NPO qualifies for a federal tax exemption it also automatically qualifies for a state tax exemption. The federal government offers many different types of tax exemptions for non-profits under IRC 501(c).^[50] The most popular kind of NPO is called a 501(c)(3).^[51] Under this code section, the NPO is exempt from paying federal income taxes and contributions made to the non-profit are generally tax-deductible for the donors.

Most NPOs are required to file an annual informational return, called a Return of Organization Exempt From Income Tax (IRS Form 990 or IRS Form 990EZ), if the organization’s gross receipts exceed $50,000 from sources other than the exempt purpose.^[52] Some religious organizations are not required to file IRS Form 990 or 990EZ.^[53]

IRS Form 990 provides an analysis of an NPO’s revenue and expenses, and net income is stated on the form as revenue less expenses. The abbreviated balance sheet on IRS Form 990 does not identify which assets and liabilities are current and therefore is not useful for calculating net current assets.

Footnotes

[^ 1] See IRS’s Employer ID Numbers webpage. For an explanation of what types of business structures require an EIN, see IRS’s Do You Need an EIN webpage.

[^ 2] For an explanation of married couples and sole proprietorship, see IRS’s Frequently Asked Questions for Entities webpage.

[^ 3] See Black’s Law Dictionary (11th ed. 2019).

[^ 4] See Matter of United Investment Group (PDF), 19 I&N Dec. 248 (Comm. 1984).

[^ 5] See Michael Spadaccini, Ultimate Guide to Incorporating in Any State (Irvine, CA: Entrepreneur Press, 2010), p. 3. For a general overview of sole proprietorships, see Jeffrey F. Beatty and Susan S. Samuelson, Business Law and the Legal Environment (Cengage Learning, 2006), p. 755. See the U.S. Small Business Administration’s (SBA’s) Choose a business structure webpage.

[^ 6] See Section 101 of the Uniform Partnership Act (1997). The Uniform Partnership Act is a uniform act from the National Conference of Commissioners on Uniform State Laws for the governance of partnerships. It has been amended several times since its promulgation, most recently in 2011 and 2013. The Uniform Partnership Act has been enacted by most U.S. states.

[^ 7] See the IRS’s Tax Information For Partnerships webpage.

[^ 8] See Section 202(a) of the Uniform Partnership Act (1997).

[^ 9] See IRS’s Instructions for Form 1065.

[^ 10] A partnership can also be formed by estoppel (where a party is held out to be a partner and can be held liable for debts or damages incurred by the partnership). See definition of “partnership by estoppel,” Black’s Law Dictionary (11th ed. 2019). A written general partnership agreement usually identifies the names of the partners; the amount and type of contribution made by each partner; each partner’s initial percentage of ownership; the business activities conducted by the partnership; whether and how partnership interests can be transferred; and the conditions allowing dissolution of the partnership. See Section 103 of the Uniform Partnership Act (1997).

[^ 11] See the IRS’s Tax Information For Partnerships webpage.

[^ 12] See Section 306 of the Uniform Partnership Act (1997).

[^ 13] See the Uniform Limited Partnership Act (2001). The Uniform Limited Partnership Act is another uniform act from the National Conference of Commissioners on Uniform State Laws for the governance of partnerships.

[^ 14] See Angela Schneeman, Law of Corporations and Other Business Organizations (Cengage Learning, 2009), p. 114.

[^ 15] See Sections 201 and 404 of the Uniform Limited Partnership Act (2001).

[^ 16] The elements identified in these written agreements include the names of partners, the amount and type of contribution made by each partner, whether the partners hold a limited partnership interest, each partner’s initial percentage of ownership, the business activities of the limited partnership, whether and how partnership interests can be transferred, and the conditions allowing the dissolution of the limited partnership. See IRS Publication 541, Partnerships.

[^ 17] See IRS’s Instructions for Form 1065. See Section 1001 of the Uniform Partnership Act.

[^ 18] See the U.S. SBA’s Choose a business structure webpage.

[^ 19] See IRS’s SOI Tax Stats - Partnership Study Explanation of Selected Terms webpage.

[^ 20] For an example of limited partnerships and LLLPs, see page 21 of the Ohio Secretary of State’s publication, Start a Partnership in Ohio (PDF).

[^ 21] State law created and governs LLLPs. See, for example, page 21 of the Ohio Secretary of State’s publication, Start a Partnership in Ohio (PDF), and State of California Franchise Tax Board’s Limited liability limited partnership webpage.

[^ 22] For a discussion of one state’s LLLP provisions, see pages 21 to 23 of the Ohio Secretary of State’s publication, Start a Partnership in Ohio (PDF).

[^ 23] See IRS’s Tax Information For Partnerships webpage.

[^ 24] The partnership must also provide a Partner’s Share of Income, Deductions, Credits, etc. (Schedule K-1) to the IRS and to each partner, which breaks down each partner's share of the business's profits and losses. In turn, each partner reports this profit and loss information on Schedule E of the partner’s individual IRS Form 1040. See IRS’s Instructions for Schedule E.

[^ 25] Negative values are represented in parentheses on tax forms.

[^ 26] See Michael Spadaccini, Ultimate Guide to Incorporating in Any State (Irvine, CA: Entrepreneur Press, 2010), p. 8.

[^ 27] See Michael Spadaccini, Ultimate Guide to Incorporating in Any State (Irvine, CA: Entrepreneur Press, 2010), p. 8.

[^ 28] See William Meade Fletcher, Cyclopedia of the Law of Private Corporations, Vol. 1, section 41.31 (Sept. 2021 Update). See DeWitt Truck Brokers, Inc. v. W. Ray Flemming Fruit Co., 540 F.2d 681 (4th Cir. 1976) (court properly ignored the existence of a corporate entity where there was a failure to follow corporate formalities).

[^ 29] See Wachovia Securities, LLC v. Jahelka, 586 F.Supp.2d 972, 1002 (N.D.I.L. 2008) (disregarding a corporation’s existence when it failed to observe required corporate formalities such as holding regular meetings, taking minutes, and maintaining corporate records).

[^ 30] For instructions on electing a different taxation structure, see IRS’s S Corporations webpage and IRS’s Instructions for Form 1120.

[^ 31] When determining whether or not a corporation has the ability to pay the beneficiary the proffered wage, officers should refer to Volume 6, Immigrants, Part E, Employment-Based Immigration, Chapter 4, Ability to Pay [6 USCIS-PM E.4].

[^ 32] S corporations, partnerships, sole proprietorships, and limited liability companies (LLCs) are not taxed on business profits unless they elect otherwise; instead, the profits pass through the businesses to their owners, who report business income or losses on their personal tax returns.

[^ 33] See IRS Publication 542, Corporations.

[^ 34] In addition to start-up costs, operating expenses, and product and advertising outlays, a C corporation can deduct the salaries and bonuses it pays and all of the costs associated with medical and retirement plans for employees. See IRS’s Instructions for Form 1120.

[^ 35] See 26 U.S.C. 1361.

[^ 36] See IRS’s S Corporations webpage. A subchapter S corporation must be a domestic corporation; have only allowable shareholders (may include persons, certain trusts, and estates, but may not include partnerships, corporations, or non-resident shareholders); have no more than 100 shareholders; have only one class of stock (for example, no preferred stock allowed); and not be an ineligible corporation (such as certain financial institutions, insurance companies, and domestic international sales corporations).

[^ 37] Negative values are represented on tax forms by parentheses.

[^ 38] See 26 U.S.C. 448(d)(2).

[^ 39] See IRS Publication 542, Corporations.

[^ 40] See IRS’s Instructions for Form 1120.

[^ 41] When determining whether or not a corporation has the ability to pay the beneficiary the proffered wage, officers should refer to Volume 6, Immigrants, Part E, Employment-Based Immigration, Chapter 4, Ability to Pay [6 USCIS-PM E.4].

[^ 42] See the U.S. SBA’s Choose a business structure webpage.

[^ 43] While the default tax treatment for an LLC is pass-through taxation, as with all entities, it may elect to be taxed differently.

[^ 44] See IRS’s SOI Tax Stats - Partnership Study Explanation of Selected Terms webpage.

[^ 45] The powers and duties of members and managers are typically outlined in the LLC’s operating agreement. See U.S. SBA’s Basic Information About Operating Agreements webpage.

[^ 46] See IRS’s Limited Liability Company (LLC) webpage. A professional limited liability company (PLLC) is an LLC organized for the purpose of providing professional services, such as a doctor, chiropractor, lawyer, accountant, architect, landscape architect, or engineer. Some states permit LLCs to engage in the practice of a licensed profession through PLLCs. Exact requirements of PLLCs vary from state to state. Typically, a PLLC's members must all be professionals practicing the same profession. In addition, the limitation of personal liability of members does not extend to professional malpractice claims.

[^ 47] See Marilyn E. Phelan, Nonprofit Organizations: Law and Taxation, sections 1:1, 4:1, and 7:1 (Oct. 2022 Update).

[^ 48] See IRS’s Exempt Organization Types webpage.

[^ 49] See Marilyn E. Phelan, Nonprofit Organizations: Law and Taxation, section 1:2 (Oct. 2022 Update).

[^ 50] See 26 U.S.C. 501.

[^ 51] To qualify, the non-profit organization must be organized and operated exclusively for the exempt purposes set forth in IRC 501(c)(3)—charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competition, and preventing cruelty to children or animals—and no part of their net earnings “may inure to any private shareholder or individual.” See 26 U.S.C. 501(c)(3). See IRS’s Exemption Requirements – 501(c)(3) Organizations webpage.

[^ 52] See IRS’s Instructions for Form 990 Return of Organization Exempt From Income Tax.

[^ 53] See IRS’s Instructions for Form 990 Return of Organization Exempt From Income Tax and IRS’s Tax Guide for Churches and Religious Organizations (PDF).

Updates

U.S. Citizenship and Immigration Services (USCIS) is issuing policy guidance in the USCIS Policy Manual to address the analysis of an employer’s ability to pay the proffered wage for certain employment-based immigrant petition adjudications.

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