An EB-5 Visa is known as an “investor” visa. The following is an explanation of the EB-5 program:
“The EB-5 visa for Immigrant Investors is a United States visa created by the Immigration Act of 1990. This visa provides a method of obtaining a green card for foreign nationals who invest money in the United States. To obtain the visa, individuals must invest $1,000,000 (or at least $500,000 in a “Targeted Employment Area” – high unemployment or rural area), creating or preserving at least 10 jobs for U.S. workers excluding the investor and their immediate family. Initially, under the first EB-5 program, the foreign investor was required to create an entirely new commercial enterprise; however, under the Pilot Program investments can be made directly in a job-generating commercial enterprise (new, or existing – “Troubled Business”), or into a “Regional Center” – a 3rd party-managed investment vehicle (private or public), which assumes the responsibility of creating the requisite jobs. Regional Centers may charge an administration fee for managing the investor’s investment.”
Upon becoming a Permanent Resident the Visa holder becomes a U.S. taxpayer and is taxable on his/her worldwide income and his/her assets are subject to U.S. Estate and Gift tax laws. It is, therefore, extremely important that the EB-5 applicant be advised in writing of their compliance requirements under the Bank Secrecy Act and under the Internal Revenue Code. Such compliance includes the timely filing of a Report of Foreign Bank or Financial Account (FBAR), income tax returns, including if applicable Returns of Controlled Foreign Corporations, Return of Foreign Partnerships, and Report of Foreign Gift, Devise of Bequest as well as Return of Foreign Trust.
The failure to file FBAR’S and tax returns can have serious civil and criminal consequences. By being advised in advance of the filing obligations the EB-5 applicant can make arrangement to timely file the returns and avoid penalties. A well informed opinion letter drafted by a lawyer skilled in the area of law and fully informed of the facts can form the basis for a “reasonable cause” defense to penalties, if there is an error in the substantive interpretation of the law. Such and opinion can make all the difference between the IRS excusing conduct such as filing to report a foreign bank account, resulting in no penalty and the IRS asserting civil penalties of up to 50% of the highest account balance in the years in question.
All EB-5 Visa applicants are making substantial commitments of time and money to relocate to the U.S. They should also take care in insuring that they are in compliance with U.S. tax and asset reporting laws to allow them to enjoy the benefits of their relocation.