Preparing Source Of Funds For Administrative Fees

Posted on May 15, 2015

 Establishing the path of funds for your $500,000 or $1,000,000 investment is no easy task. But lately, there has been some confusion regarding the $50,000 administrative fees charged by regional centers—are investors required to establish source of funds for this additional sum as well?

The February 26, 2015 Stakeholder’s Meeting on source of funds issues left many people scratching their heads. Although the instructions given by the USCIS representative seemed consistent with USCIS regulations, many practitioners are skeptical that there are discrepancies between regulation and reality due to past cases.

Regulations

Under USCIS regulations, an EB-5 Investor Green Card Visa application must include “evidence that the alien has invested or is actively in the process of investing lawfully obtained capital in a new commercial enterprise in the United States which will create full-time positions for not fewer than 10 qualifying employees.” The regulations further state that the “amount of capital necessary to make a qualifying investment in the United States is one million” or 500,000 dollars if the investment is in a TEA, or targeted employment area.

Based on the way that the regulation is written, it is reasonable to conclude that investment capital alone is the sum of money that must be documented as coming from a legal source, excluding the ancillary administrative fees. However, experience tells us otherwise.

Stakeholders Meetings

In past Stakeholder’s Meetings, EB-5 practitioners were advised to provide source of funds for the administrative fees. Those who failed to show lawful sources of administrative fees were subjected to requests for evidence (RFEs). In its RFE, USCIS required investors to “provide evidence identifying the source of the administrative fee.” Although different RFEs were phrased differently, the requests were essentially the same: the administrative fees needed to be sourced.

At the February 26, 2015, Stakeholder’s Meeting on EB-5 source of funds issues, participants received a new set of instructions on administrative fees, contrary to past USCIS adjudications and policy.  A USCIS representative advised that administrative fees do not need to be sourced because there is no legal basis for requiring administrative fees to have a lawful source. She clarified that USCIS only requires proof of administrative fee payment as confirmation that the administrative fee was not deducted from the $500,000 or $1 million investment. Although this is good news for investors, EB-5 attorneys should be cautiously optimistic, as it is still unclear whether USCIS will adopt this view.

In light of these mixed messages, many investors began to question whether they need to document administrative fees. Since there are no official guidelines on administrative fees from USCIS at this point, our office will take the conservative approach by requiring investors to source both the capital contribution amount and the administrative fee, in order to avoid any RFEs.

If you have questions about documenting your source of funds for your EB-5 application, the Law Offices of Vaughan de Kirby wants to help. Click here to send us a message online, or give us a call at 415-221-2345.

Vaughan de Kirby
California Immigration Attorney

EB-5 Regional Center Program Ends 12/22/17

Congress has extended the current Regional Center program to December 22nd, 2017, at which time it will sunset unless extended. We anticipate future legislation that will call for an increased investment amount and more stringent requirements. For this reason, we recommend to our clients that they take action under the current law if at all possible.

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