Ability to pay

In plain terms: ability to pay is the proof that the employer has enough money to pay the sponsored worker the offered wage, from the priority date until the worker gets the green card.

USCIS reviews it as part of the I-140. With EB3.work, the worker doesn’t start work for the employer until the green card is approved, so ability to pay is shown through the employer’s own financial records, mainly its net income or net current assets. An employer that sponsors several workers needs to show it can pay all of them. The EB3.work Employer Eligibility Calculator estimates how many workers an employer is eligible to sponsor, based on its most recently filed tax return, number of employees, the position it’s hiring for and its location.

Why tax returns are required: the federal regulation for employment-based petitions (8 CFR 204.5(g)(2)) requires the employer to submit annual reports, federal tax returns or audited financial statements as evidence of ability to pay. Most small and mid-size employers don’t publish annual reports or have audited statements, so federal tax returns are usually the document they use. Because tax returns are filed with the IRS, USCIS treats them as reliable, and it compares the net income on page 1 of the return, or the net current assets on Schedule L, with the offered wage. An employer with 100 or more employees may submit a letter from a financial officer instead, but USCIS can still request the tax returns, and often does. USCIS explains how it reviews ability to pay in the USCIS Policy Manual, Volume 6, Part E, Chapter 4, Ability to Pay.

Net income

In plain terms: net income is the employer’s profit for the year as shown on page 1 of its federal tax return. It’s the first number USCIS checks for ability to pay.

If net income for a year is equal to or greater than the offered wage, USCIS generally treats ability to pay as shown for that year. With EB3.work, the worker hasn’t started work for the employer yet, so net income must cover the full offered wage. When the employer has sponsored several workers, USCIS weighs net income against the total wages owed to all of them. Example: an employer sponsoring three workers at $35,000 a year each needs $105,000 in net income (or net current assets) for the year.

Net current assets

In plain terms: net current assets are the employer’s current assets minus its current liabilities, taken from Schedule L, the balance sheet in its federal tax return.

Current assets are cash and other assets expected to turn into cash within a year, such as accounts receivable. Current liabilities are debts due within a year, such as accounts payable and short-term loans. USCIS looks at net current assets when net income alone doesn’t cover the offered wage. If net current assets for that year are equal to or greater than the offered wage, USCIS generally treats ability to pay as shown for that year, so a company with a low profit but a strong balance sheet can still qualify.

Financial officer letter (employers with 100 or more workers)

In plain terms: an employer with 100 or more workers can show ability to pay with a signed statement from a financial officer, such as the CFO or controller, confirming the company can pay the offered wage.

The regulation allows USCIS to accept this letter in place of annual reports, tax returns or audited financial statements. USCIS can still request the federal tax returns or other financial records, and it often does, especially when the employer is sponsoring a large number of workers.

Totality of the circumstances (Matter of Sonegawa)

In plain terms: totality of the circumstances means USCIS looks at the employer’s whole financial picture, not just one line on one tax return, when net income and net current assets alone don’t show ability to pay.

The rule comes from Matter of Sonegawa, 12 I&N Dec. 612 (Reg’l Comm’r 1967), a precedent decision about a well-established business that had one unprofitable year after moving locations. USCIS approved the petition because the business’s overall history showed it could pay. The USCIS Policy Manual applies the same approach today.

Factors USCIS can weigh include:

• How long the company has been in business and its history of growth.
• The size of the business, including its number of employees and overall revenue.
• An unusual loss or one-time expense in a particular year, compared with the company’s normal results.
• The company’s reputation in its industry.
• Other evidence of financial strength, such as lines of credit or other assets.