Key U.S. Tax Considerations for EB-5 (and Other) Visa Applicants
By Patrick W. Martin1
I. EB-5 VISA GENERALLY
Currently, there are more than 6,000 foreign investors who apply annually for lawful permanent residence2 predicated upon the Employment Based Fifth Preference ("EB-5") program. The statutory regime for EB-5 visas was adopted more than two decades ago. This visa category is available to qualified immigrants seeking to enter the United States ("U.S.") for the purpose of engaging in a new commercial enterprise in which the immigrant has invested or is actively in the process of investing at least $1,000,000 (which may be reduced to $500,000 if the new commercial enterprise is located in a targeted employment area).3 The investment must benefit the U.S. economy and create full-time employment for not fewer than ten U.S. citizens or other qualified employees. Upon admission to the U.S. with an EB-5 visa or upon adjustment to EB-5 status, the investor, his or her spouse and their children are conditional lawful permanent residents for a two year period. Acquiring lawful permanent resident ("LPR") immigration status has important U.S. tax consequences. A successful EB-5 investor must apply to have the conditions upon "permanent" residence removed by the United States Citizenship and Immigration Service ("USCIS").4 However, there is no guaranty that the investor will have these conditions removed and become an "unconditional" lawful permanent resident.
II. U.S. INCOME TAX DEFINITIONS GENERALLY