Overview

Readers are most likely tired of me reminding everyone how I grew up in the Panama Canal Zone and what a unique and excellent experience it was.  It is a fact and experience that lives with me every day that I am on the Planet.  During my last ten months in South Florida, I was able to reconnect with my interests in all things Latin American. The experience allowed me to make a few observations as a gringo!

In the course of this experience, I had the impression that Anglo-Saxons in South Florida (read Gringos) after fifty years of heavy Latin American immigration in South Florida, were finally comfortable making the decision that it might not be a bad idea to learn Spanish. In the meantime, Brazilians began immigrating to South Florida in the last twenty years, and the same Anglo-Saxons who just about to learn Spanish realized that Brazilians speak Portuguese and that Spanish is not Portuguese. Such confusion!

I recently formed the Brazilian-American Law Center in order to focus on the Brazilian community in the United States. As a tax lawyer, it has caused me to learn new areas of the law away from the highly specialized tax background that I practice in my other law firm, Law Firm of Gerald R. Nowotny.

Why Portuguese? I was a double major at West Point in Spanish and Portuguese, but the fact of the matter is that I always enjoyed Portuguese more than Spanish. At the same time, the Brazilian market is under-served based upon language differences in more areas than just immigration law and I aim to serve the Brazilian community. I have sat in enough meetings where Cuban-American lawyers speak to Brazilians in Spanish. Why not learn Portuguese!

As I migrate into new areas of the law that are relevant – family and business immigration; import and export law, I am struck about what is being done and what is not being done. As a professional relatively new to the area, there is tendency to look at things not only with fresh eyes but with creativity. As a tax lawyer, clients expect you to not only know what the law says but also what it doesn’t say.

This article represents some of my initial impressions not only with respect to things that are well known, but with a fresh look as a result of my cultural travels with respect to the Latin American community in general but specifically the Brazilian community.

Latin American Overview

When it comes to Latin American politics, the cliché “The more things change, the more things stay the same!” remains true. Latin American politics seem to always remain unstable with corrupt governments in place. As a consequence, the economies of the various Latin countries always seem to be upside-down.  The last government in power always seems to steal more than the prior government. Additionally, as a cultural observation, “trickle down” politics does not seem to exist in the Latin American countries. The Rich keep everything! Furthermore, the U.S. government always seems to bet on the “wrong horse” in Latin America.

The consequence of this political and economic reality is the following – the future of Latin American is very uncertain. Latin Americans regardless of educational and professional background have modest prospects in their own countries unless they are from an elite family that is socially connected. Consequently, Latin Americans will find every method legal and illegal to get to the United States. Even if they work at a profession in the United States that is well below than their educational background from their home country, the long term prospects are much better and certain. And of course, Latin Americans have what they can never have in their own countries, political and economic freedom.

Brazil for example, is the fifth largest economy in the world and the “B” in BRIC. After a nice economic “run” things are back to being uncertain again. The socialist agenda and reach of the current government in Brazilian has business owners and upper middle class people nervous. Violence such as home invasions and kidnapping is on the rise.

Many Brazilians have a viable business within Brazil and investments that can support the family while it is living outside of Brazil without a need to work in the United States. A business owner may desire to relocate his family to the United States for safety reasons. In the interim, the business owner may choose to travel back and forth between South Florida and Brazil in order to operate the family business while the family remains in South Florida. Miami International has multiple direct flights to eleven different cities in Brazil on a daily basis. It is probably harder to get to Dubuque, Iowa by comparison than Belo Horizonte!

As the political and economic situation in Latin American is somewhat of a roller coaster, the timeframe necessary to remain in the United States is also an unknown. Strategies that create the ability to come and go between the United States and home country without making that big commitment to become a U.S. resident or citizen for tax purposes should be a major consideration.

Immigration Considerations in General

A business owner in Brazil has a number of business immigration options to consider in order to bring his family to the United States. A non-business owner may have sufficient personal or family investments in Brazil or outside of Brazil to support the family while they are in the United States.

The EB-5 visa has been promoted heavily as a basis for immigrating to the United States on a permanent basis. Approximately eighty percent of the EB-5 visas have been awarded to Chinese entrepreneurs. However, from my perspective, the EB-5 has been over-promoted by advisors including to Latin Americans. From my standpoint, the EB-5 carries a heavy price tag on several fronts.

As a practical matter, most entrepreneurs as a personality trait, prefer to retain management and control over the management of a business. Most EB-5 investments have been structured as funds or investments managed by entrepreneurs other than the EB-5 applicant. Secondly, the cost of $500,000-$1 million may not be a large price tag in general for many Chinese investors to lose in a bad investment, but remains a significant investment, for everyone besides the Chinese.

My best sense regarding most EB-5 investments is that EB-5 investment been marginal to mediocre at best. Third, less expensive immigration options may exist that provide the business owner with direct management and control over a business investment along with a much quicker timeframe for USCIS approval. Lastly, the immigrant better think twice (or maybe three times) from a tax perspective about becoming an American taxpayer taxed on worldwide income and assets.

The need to file American tax returns and deal with the IRS may be more daunting than most immigrants ever imagined. Many Latin Americans are not accustomed to a Department of Revenue that they cannot bribe. Additionally, immigrant business owners with a pile of cash in the Cayman Islands or Panama will need to start disclosing on an annual basis these offshore bank accounts and investments to the United States Government. The price for non-compliance is severe. Lastly, the price to pay if the immigrant changes his mind and wants to give up his American residency and return back to Latin America also has a high price tag in the expatriation process.

Depending upon the facts of the immigrant, simple solutions may exist that provide a comprehensive solution for the family without a substantial investment of time or capital. The F1 student visa viewed from a different perspective may provide such a solution that is relatively inexpensive and quick to execute while meeting all of the personal requirements of the Latin American family.

F-1 Student Visa

For purposes of this discussion, the visa applicant is an entrepreneur, married with a family and young children (ages 5 and 6) in Brazil. The entrepreneur has a solid and profitable business in Sao Paulo. The business owner is concerned about the political and economic prospects of Brazil in the short term and equally concerned about the safety of his family.

He owns a nice home in Sao Paulo and plans to continue to operate the business. He owns investment real estate in south Florida and Sao Paolo. He has offshore investments in the Cayman Islands. He likes the anonymity of living in South Florida. The growing Brazilian community is a positive factor along with the large Latin American population and large volume of daily flights to Brazil. Equally important, is the idea that his children can receive an education in American English and possibly become as fluent in Spanish as they are in Portuguese. The tropical weather is a popular selling point with his wife.

He proposes to move his family Boca Raton, Florida, the affluent community in southern Palm Beach County. The town has a large Brazilian population and is next to the largest Brazilian community in the United States - Pompano Beach-Deerfield Beach. Boca Raton offers a number of excellent religious and non-religious private school options from kindergarten through twelfth grade.   The area surrounding Fort Lauderdale also offers a wide selection of non-religious and religious private school from kindergarten through twelfth grade. 

The F1 student visa is typically viewed from the perspective of the foreign student coming to the United States for college or boarding school. The reality is that the F1 visa does not have any age restrictions with respect to its application.  The administrative requirements and costs of the F-1 and F-2 visa (for dependents) are inexpensive and straight-forward when compared to many other visa options. Furthermore, the F-1 visa may be easily renewed in order to complete the educational process which can be kindergarten through graduate school.

One requirement is that the F-1 applicant must have a foreign residence to return there upon the completion of their studies. The F-1 visa is limited to the academic institution where the students complete their studies. As a practical matter, the certification process for Student and Exchange Visitor Program through the Department of Homeland Security is quick and inexpensive. For any number of schools, the inclusion of international students at a higher tuition has made the difference between closing and keeping the school open.

The foreign student must be able to demonstrate financial support and ties to the home country such as family and family and personal assets. The F1 visa is limited for public school attendance to a twelve month period and the foreign student must reimburse the county or state government. As a result, the immigration strategy here is attendance at a private school from kindergarten through university or graduate school if desired. In our example, we have assumed that Dad is affluent but not filthy rich.

Parents are able to obtain an F-2 visa to accompany the student. The parents can lease or purchase a home to live in while Junior and his sister complete elementary, and secondary school along with college. The parent as the F-2 visa holder should have no trouble traveling outside of the country without the F-1 student (child) providing the Form I-20 Certificate of Eligibility for Non-Immigrant Students.

The Student and Exchange Visitor Program (SEVP_ Fee is $200 and is quickly processed. The SEVP does not apply to the F-2 dependents.

Summary

The strategy outlined above may be a fact pattern limited to a small number of people in Latin America (or anywhere else for that matter!) but I think not. From a tax perspective along with the cost and complexity of the immigration process, the circumstances may dictate a solution that is low cost and efficient to execute from a time perspective. The situation in the home country may be a temporary situation.

My point is this, why get locked into an expensive and complicated and long term solution if the current situation and circumstances dictate something that is quick and easy. Other immigration solutions that are long-term may be contemplated at a later point in time. However, in many cases, the biggest planning consideration is how to get to the United States and as inexpensively as possible.

My sense from a Latin American perspective is that the strategy outlined above using the F-1 and F-2 visas is something that a large number of Latin Americans and Brazilians in particular can quickly and inexpensively implement.