Our firm has recently seen a notable increase in Requests for Evidence (RFEs) in I-140 petitions where the beneficiary is being paid at or above the proffered wage, yet USCIS continues to question ability to pay based on negative net income reflected on the employer’s tax returns. While submission of tax returns is required under the regulations, consistent payment of the proffered wage should be dispositive. Where the employer is already paying the beneficiary more than the wage offered, the ability-to-pay analysis should end there. In this article we discuss issues at play and provide a proven strategy for overcoming such RFEs.
Regulatory Framework: Ability to Pay and the Role of Actual Wages
Employment-based immigrant petitions that require a job offer (including most EB-2/EB-3 cases) must be supported by evidence that the U.S. employer can pay the proffered wage from the priority date until the beneficiary becomes a permanent resident. This requirement is codified at 8 C.F.R. § 204.5(g)(2), which provides that:
- Any such petition “must be accompanied by evidence that the prospective United States employer has the ability to pay the proffered wage.”
- The employer “must demonstrate this ability at the time the priority date is established and continuing until the beneficiary obtains lawful permanent residence.”
- Primary evidence “shall be either in the form of copies of annual reports, federal tax returns, or audited financial statements.”
- For employers with 100+ workers, USCIS “may accept a statement from a financial officer” attesting to ability to pay.
When the beneficiary is being paid at or above the proffered wage, that wage payment becomes the central piece of evidence and in many cases, it is sufficient on its own.
USCIS Policy: Wages as Prima Facie Ability to Pay
USCIS guidance and AAO decisions have crystallized three primary methods to establish the ability to pay:
- Net income equals or exceeds the proffered wage;
- Net current assets equal or exceed the proffered wage; or
- The petitioner “is employing the beneficiary, and has paid or currently is paying the proffered wage.”
USCIS policy explicitly recognizes that actual payment of the wage can, by itself, satisfy the ability to pay, if done consistently from the priority date and that where the employer shows credible, verifiable evidence that the petitioner is employing the beneficiary, and has paid or currently is paying the proffered wage, officers are directed to make a positive ability-to-pay determination.
The wage is established by submitting copies of W2 and paystubs from the priority date. However, just because the beneficiary is being paid more than the proffered wage does not negate the requirement to provide a copy of the tax return. USCIS policy manual specifically states, “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.” Failure to provide the tax return etc. will surely result in an RFE even if the beneficiary is being paid significantly more than the proffered wage.
However, USCIS should not deny the petition for lack of ability to pay based solely on negative net income or other unfavorable tax return figures where the wage equals or exceeds the proffered wage.
Administrative Appeals Office (AAO) Decisions.
The AAO has repeatedly held that when a Petitioner is employing the Beneficiary and paying at least the offered wage, such evidence constitutes prima facie proof of the Petitioner’s ability to pay. Review of the tax returns becomes relevant only when the Beneficiary’s wages fall below the proffered amount.
Multiple AAO decisions have taken the same position. Quoting from one AAO decision:
“In determining the petitioner’s ability to pay the proffered wage during a given period, CIS will examine whether the petitioner employed the beneficiary during that period. If the petitioner establishes by documentary evidence that it employed the beneficiary at a salary equal to or greater than the proffered wage, the evidence will be considered prima facie proof of the petitioner’s ability to pay the proffered wage. . .
If the petitioner does not establish that it employed and paid the beneficiary an amount at least equal to the proffered wage during a given period, the AAO will, in addition, examine the net income figure reflected on the petitioner’s federal income tax return, without consideration of depreciation or other expenses. . . “
The Preponderance Standard: “More Likely Than Not”
Any ability-to-pay analysis is governed by the “preponderance of the evidence” standard, which requires that the Petitioner show that its claim that it can pay the proffered wage continuously from the priority date is “probably true,” meaning more likely than not, not beyond a reasonable doubt.
In an over-wage payment scenario, the argument is straightforward. If W-2s and paystubs clearly show that the employer is paying more than the proffered wage it is more likely than not that the employer has the ability to pay the lesser, certified wage. A negative net income entry on a single tax return does not negate the reality that the employer in fact paid the wage.
Using the “Paid More Than the Offered Wage” Fact Pattern to Overcome RFEs
- Start by confirming the certified proffered wage (e.g., $100,000.00) and the priority date.
- Specify the actual compensation paid for the relevant year(s) (e.g., $115,000.00), highlighting that it exceeds the certified wage by a substantial margin.
- Attach and cross-reference W2s/paystubs from the priority date and paystubs.
- If the tax returns have a positive income highlight that also.
- If the Petitioner has paid substantial wages (e.g., $3 million) highlight that also as part of the “more likely than not” standard. This argument can be helpful where there is a shortfall in wages or net income.
- Even if the tax returns show a negative net income, reference the USCIS policy manual and AAO decisions to demonstrate that the ability to pay the offered wage has been met where the actual wage meets or exceeds the offered wage.
- If the negative net income is an anomaly and previous years show strong income highlight that and explain why the reason that the income was negative for that year.
Avoiding Common Pitfalls in “Over-Wage” Ability-to-Pay Cases
Even in favorable fact patterns, mistakes in presentation can invite RFEs or denials, for example.
- Failing to provide W-2s/paystubs for every year from priority date through the most recent completed year.
- Failing to provide the tax return, even where the beneficiary is paid above the proffered wage.
- Discrepancies between the certified wage on the PERM or I-140 and the amount described in the employer’s letters or payroll.
- Addressing only the filing year rather than every year from the priority date onward.
- In cases where the Petitioner has filed multiple I-140s, failing to recognize the need to demonstrate ability to pay for all beneficiaries.
How to handle the case where the beneficiary’s actual wage is less than the proffered wage.
If the beneficiary’s actual wage is less than the proffered wage, then the Petitioner is required to demonstrate that its net income or net assets are at least equal or greater than the difference between the two. For example, if the proffered wage is $120,000.00 but the beneficiary has only been paid $100,000.00 this leaves a short fall of $20,000.00. A negative net income in this case could be devastating. In this case having a net income of at least $20,000.00 or close to it is going to be essential to obtaining approval.
Conclusion
When the beneficiary is being paid more than the offered wage, the Petitioner is in a fundamentally strong position to overcome an I-140 ability to pay RFE. The governing regulation requires proof of ability to pay from the priority date forward, and both USCIS policy and longstanding AAO precedent recognize that credible evidence of actual wage payment at or above the proffered wage constitutes prima facie proof of that ability.
While tax returns must still be submitted as part of the evidentiary record, negative net income alone should not defeat an I-140 petition where the employer has in fact paid the required wage. Under the preponderance of the evidence standard, consistent over-payment of the proffered wage makes it more likely than not that the employer has and continues to have the ability to pay.
A successful RFE response in these cases should lead with W-2s and paystubs demonstrating payment at or above the proffered wage, explicitly ground the argument in the regulatory framework, USCIS policy, and AAO guidance, address tax return deficiencies as secondary and legally subordinate where there is no wage shortfall, and demonstrate consistency from the priority date through the present.
When properly framed, “paid more than the offered wage” cases should be approvable, even where there is a negative net income. However, USCIS appears to be questioning these cases more frequently and putting the burden on the Petitioner to demonstrate why the case is approvable. The key here is to ensure that USCIS is held to its own regulations, policy guidance, and AAO precedent and applies the ability to pay analysis in the proper order.
If you have questions regarding the above please reach out to PSBP Partner, Chris Prescott at cprecsott@psbplaw.com.