EB-5 investors must consider several important factors in the adjudication process when applying for a U.S. green card. Understanding the complexities, including taxation, project development, and the possibility of legal action against the USCIS, is beneficial for EB-5 applicants to increase a smooth transition to permanent residency in America.
EB-5 investors should prepare for U.S. worldwide taxation on global income
EB-5 investors who receive their green cards are often surprised by U.S. worldwide taxation on global income, including overseas businesses. Jason Auerbach from Navis Advisors recommends early tax planning to mitigate these implications and protect assets.
“The one thing we have noticed is that nobody talks about what happens on day one when you get here. What are the implications? And the U.S. financial system is a morass. So, what we talk about, people, is you need to plan,” he says.
Auerbach also highlights: “We think that you should start planning as soon as you file an I-526 form because when you come to the United States and become a resident alien, you’ll first learn that you’re subject to worldwide taxation on all your income. And we can’t tell you how many times we run across investors who own businesses overseas, and they don’t realize the implications that once they get their EB-5 visa and they get their temporary green card, that all of a sudden that stuff is going to be subject to taxation.”
Proper tax planning should begin before arriving in the U.S. to protect income, overseas assets, and estates, Auerbach adds.
“What can you do to set up those businesses so they wouldn’t be subject to taxation in the United States? That’s where tax planning comes into play,” he says.
EB-5 investors can explore partial investment options to bridge funding gaps
Eren Cicekdagi from Golden Gate Global explains that investors must be aware of partial investment options offered by regional centers, which accommodate limited liquidity and facilitate smoother financing pathways.
“Many of these investors are not fully liquid in their applications and ability to finance EB-5 immediately. So, there are partial investments. A lot of regional centers currently allow and facilitate with the lawyers.”
EB-5 investors must prepare for potential litigation
Mandamus actions are becoming more common in addressing processing delays by USCIS. Understanding this legal tool is something investors must keep in mind when approaching their application, Cicekdagi adds.
“We don’t love to constantly be in litigation, or at least some sort of litigation against the government. It’s not fun. It requires documentation, etc. But nowadays, all the attorneys are becoming more and more experts in this, whether it’s the I-526 or I-9 56F petition. The mandamus action, as many of you know, is like an administrative lawsuit to compel USCIS to take action. And we’ve been utilizing that whenever there is an unreasonable wait and the reasonable aspect is obviously up for discussion.”
EB-5 investors need to research material risks in project offering packages
According to Kurt Reuss from EB-5 Marketplace, investors should focus on material risks in offering packages, not only on the project details, for thorough due diligence.
“Often, in an offering package, you’ll see pages of risks associated with the project, but the material risks are really what you should be focused on. So, a due diligence report to me intends to simplify the offering. Point out where the risks might be, and to have the confidence that the claims that are being made have been verified.”
The visa bulletin is critical for managing expectations in EB-5 projects
Bernard Wolfsdorf of WR Immigration cautions developers to monitor the visa bulletin as it is crucial for managing expectations and ensuring that EB-5 project timelines align with visa availability, preventing client dissatisfaction due to unforeseen delays.
“Watch the visa bulletin every month. Understand the visa bulletin. Because, you know, if you’re trying to sell a project, you’re trying to file a green card case and if there’s a red light there, your clients are going to be extremely unhappy with you.”
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