Category Archives: Family Immigration

WORKPLACE ENFORCEMENT OF EMPLOYMENT ELIGIBILITY RULES IS A POTENTIAL TIME BOMB

By:  Coleman Jackson, Attorney
March 5, 2018

WORKPLACE ENFORCEMENT OF EMPLOYMENT ELIGIBILITY RULES

Any individual who is not a citizen or national or lawful permanent resident or specifically authorized to work in the United States cannot be lawfully hired as an employee by any individual, company or agency.  Any employer who intentionally hires anyone not authorized to work in the United States violates Public Law 99-603 (Act of 11/6/1986).  This law was passed by the U.S. Congress and signed by President Ronald Reagan in order to control and deter unlawful entries into the United States.  This law, commonly referred to as amnesty provided for legalization of undocumented immigrants who had been continuously unlawfully residing and working in the United States since 1982, legalization of certain agricultural workers, sanctions for employers who knowingly hire undocumented workers, and increased borders enforcement.

This blog’s focus is on the provision of Public Law 99-603 that prohibits and penalizes any U.S. individual, organization or agency that intentionally hires or recruits to hire workers who are not authorized to work in the United States.  U.S. Citizenship and Immigration Services (USCIS) Form I-9 is required to be used by all employers regardless of whether they are classified as large, medium, small employers to document their continuous compliance with their obligations under Public Law 99-603. Form I-9 is a three page document.  Employers and Employees are required to complete their respective sections of Form I-9.  Form I-9 comes with a 15 page detailed set of instructions to employers and employees that must be complied with from the very initial stage of hiring any worker by an American person or business.  Since November 27, 2011, American employers must complete Form I-9 to document verification of the identity and employment authorization of each and every new employee.  The rule applies to all employees regardless whether the employee is a United States Citizen, National, and Lawful Permanent Resident or otherwise lawfully authorized to work in the United States.  The employee must complete their section of Form I-9 within one day of starting to work, and the employer must complete their section of Form I-9 within three days of the employees hire date. The employer cannot simply take the employees word for it.  The employee must provide unexpired documentation from the categories listed on page three of Form I-9.  Again, the employer cannot tell the employee what documentation to present.  The employer or their agent must personally examine the actual document (original) presented by the employee.  The employer must make a copy of the documents presented and maintain them in their files.  Moreover, the employer has a continuing obligation under Public Law 99-603 to update their I-9 files when there is expiration date on an employees work authorization card.  The requirements we have discussed in this paragraph can be thought of as the I-9 documentation requirements.  Form I-9 is not filed with the U.S. government.  Every employer must maintain an I-9 file on each employee and make it available for inspection and examination in the event of an Immigration and Customs Enforcement visit.  Immigration and Customs Enforcement (ICE) performs I-9 audits without advance notice.  ICE workplace audits have been on the rise in recent years.  ICE raids affecting some of the larger employers have been widely reported on by the U.S. press.  But just because an employer is not a large company does not mean that they are exempt from ICE I-9 Immigration and Nationalization Act (INA) enforcement actions.  All U.S. employers are subject to an ICE raid regardless of whether they hire immigrants or not since Public Law 99-603 requires all employers to document the identity and authorization to work of all workers, including U.S. citizens, Nationals, Permanent Residents, and others.  All employees mean all employees and all employers mean all employers regardless whether the employer is hiring a new hire, a rehire, temporary or permanent worker.  All U.S. employers potentially face workplace enforcement of employment eligibility ICE raids at anytime.  Workplace enforcement raids are like a time bomb.

Form I-9 Filing

Repeat, federal immigration law applies to all U.S. employers.  Who is an employer for purposes of workplace enforcement of employment eligibility rules?  I will address it from the perspective as to who is an employee under the Act.  An employee for Form I-9 purposes means any person who performs labor or services in the United States for an employer in return for wages or other compensation or payment.  It could be remuneration in the form of payment-in-kind.  Employee for Form I-9 purposes does not include independent contractors, subcontractors, volunteers or certain casual domestic workers.  By looking at it from the vantage point of who is an employee, employers should be able to determine whether they are likely to be considered an employer for Form I-9 purposes.

The Form I-9 must be maintained in a File by the employer

Are there any penalties for U.S. employers who violate the law?  Yes, absolutely since all U.S. employers are subject to the workplace enforcement of employment eligibility rules!  Besides the potential for public shame associated with cheating by hiring undocumented workers to gain an unfair advantage over competitors, the U.S. government can impose civil fines and even criminal prosecution in  more heinous cases.  The Form I-9 must be completed accurately.    The Form I-9 must be maintained in a File by the employer.  The Form I-9 must be made available for inspection anytime ICE asks to review them.  When ICE finds that an employer has knowingly hired or knowingly continued to hire an unauthorized worker, or failed to comply with Form I-9 employee identification and work eligibility requirements, ICE or a Department of Homeland Security Administrative Law Judge will issue the employer a Notice of Intent to Fine (NIF).  The employer has 30 days from receipt of the NIF to request a hearing on the merits.  If the employer fails to respond to the NIF, it becomes final in 30 days.  At the I-9 hearing, employers are able to raise good faith defenses (that is the employer made reasonable efforts to comply with the paperwork requirements of section 274A (b) of the INA.)  If the employer looses at the hearing or fail to request a hearing or failed to attend the hearing, civil penalties will likely be imposed considering the size of the employer, lawful status of the employees involved, the seriousness of the infractions including prior I-9 violations, and the good faith efforts of the employer to comply with its obligations under the INA.  Furthermore, employers who knowingly employ unauthorized workers or fail to comply with section 274A (b) of the INA could also face criminal prosecution.  Employers convicted in federal court of having engaged in a pattern or practice of knowingly hiring unauthorized workers, or continuing to hire them after November 6, 1986 are likely to face fines and up to a maximum of six months in federal prison.  Moreover, employees who use fraudulent documentation to gain U.S. employment can be subjected to civil fines and criminal prosecution resulting in up to 5 years in federal prison.  The penalties that we have been discussing are under the Immigration and Nationalization Act (INA).  But employees and employers who knowingly violate the INA could be subjected to other federal statutes that impose much harsher civil fines and criminal punishment.  The Internal Revenue Code, U.S. Code 26; for example, imposes very severe civil fines and criminal penalties for taxpayers who violate U.S. federal tax statutes associated with misclassification of workers as independent contractors when in fact they are employees.  Worker misclassification errors can place employers in serious legal jeopardy.

employment eligibility verification

The burden of proving compliance with employment eligibility verification requirements is on U.S. employers.  Suggested steps to get ready for an I-9 raid:

  1. Make a current list of all of your employees (current, new hires, rehires, terminated);
  2. Review Form I-9 files on everyone on the list (don’t forget that all employers must have an I-9 file for all employees, including U.S. citizens, Nationals, Lawful Permanent Residents and anyone else working as an employee);
  3. Check the I-9 files for the validity of the documentation (make sure nothing has expired because identity and work eligibility documentation must be current; these documents cannot be expired);
  4. Check off each employee as they are successfully vetted on the employer employee list as they are cleared;
  5. Follow-up on any discrepancies. Contact the worker for updated or corrected information and timely resolve the issue;
  6. Document the company’s Form I-9 procedures and periodical compliance with those procedures. Don’t’ forget to check for government changes in the requirements as part of the company’s due diligence process.  Document due diligence and good faith efforts to comply with I-9 requirements—this all should be maintained in your I-9 Due Diligence Files;
  7. Follow-up and follow up some more on I-9  discrepancies and release any worker that cannot be vetted to work lawfully in the United States;
  8. Assign I-9 duties to competent individuals within the company or advisors competent in the law, taxes and immigration workplace matters. Exercise due diligence:  gather pertinent information; understand the company’s I-9 obligations and cooperate with authorities in workplace enforcement of employment eligibility issues.

These are merely some suggestions designed to cut down on the fear and confusion that is often associated with ICE workplace enforcement.  Due diligence can be a stress buster; while failing to prepare for a workplace enforcement of employment eligibility rules  can be as serious blow to wealth as a heart attack can be to health.

This law blog is written by the Taxation | Litigation | Immigration Law Firm of Coleman Jackson, P.C. for educational purposes; it does not create an attorney-client relationship between this law firm and its reader.  You should consult with legal counsel in your geographical area with respect to any legal issues impacting you, your family or business.

Coleman Jackson, P.C. | Taxation, Litigation, Immigration Law Firm | English (214) 599-0431 | Spanish (214) 599-0432

U.S.A. IMMIGRATION OPTIONS AVAILABLE TO VICTIMS OF DOMESTIC VIOLENCE

By Coleman Jackson, Attorney & Counselor at Law
July 12, 2017

U.S.A. IMMIGRATION OPTIONS AVAILABLE TO VICTIMS OF DOMESTIC VIOLENCE

There are three ways immigrants who become victims of domestic violence, sexual assault, and some other specific crimes may apply for legal immigration status for themselves and their child(ren).

  1. Self-petition for legal status under the Violence Against Women Act (VAWA)
  2. Cancellation of removal under VAWA
  3. U-Visa (nonimmigrant crime victim’s visa)

A victim’s application is confidential and no one, including an abuser, crime perpetrator or family member, will be told that you applied.

This law blog is written by the Taxation | Litigation | Immigration Law Firm of Coleman Jackson, P.C. for educational purposes; it does not create an attorney-client relationship between this law firm and its reader.  You should consult with legal counsel in your geographical area with respect to any legal issues impacting you, your family or business.

Coleman Jackson, P.C. | Taxation, Litigation, Immigration Law Firm | English (214) 599-0431 | Spanish (214) 599-0432

The Substantial Presence Test

May 08, 2017
By Coleman Jackson, Attorney, CPA

An Immigrant is Considered a Resident of the U.S. for Federal Tax Purposes When They Meet this Test

The Substantial Presence Test

Except for certain exempt individuals, such as teachers, trainees, students, professional athletes and certain foreign government individuals, immigrants physically in the United States who meet the substantial presence test as depicted in the diagram below are considered an U.S. Resident for federal tax purposes.

(a) (b) (c) (d)
Year Number of Days Immigrant Physically Present in United States  During Period Multiplier Substantial Present Days (Multiply (b) times (c))
Current Year   1.00  
First Prior Year   .333  
Second Prior Year   .167  
Total  Days Immigrant Present in U.S. (add column (d)  

tax status of immigrants

It is critical to determine the tax status of immigrants because immigrants who are Green Card Holders and those who meet the substantial presence test are taxed just like United States Citizens.  United States Citizens are taxed on their world wide income no matter where the income is earned.  Generally speaking, immigrants meet the substantial presence test when all of the following statements are true:

  1. The immigrant was physically present in the United States for at least 31 days during the current calendar year; and
  2. The immigrant was physically present in the United States for 183 days during the three year period for which residency is being determined.

In the event that both of these conditions are met and none of the exemptions apply, the immigrant is treated as a Resident of the United States for tax purposes.  But as is typical in American law, there are exceptions even if an immigrant meets the substantial presence test.  The ‘closer connection to a foreign country exception’ is just such an exception.    Also what constitutes a day in the United States can be affected by whether the immigrant is a regular commuter from Mexico or Canada, or whether the immigrant is in transit between two foreign points outside of the U.S., or simply whether the immigrant is in the U.S. in one of the ‘exempt person statuses’ that we mentioned at the top of this blog.  Even the medical condition of the immigrant could impact whether time in the United States is counted toward the term ‘day’ in the United States for the substantial presence test.  Any time in the United States due to a medical condition that arose while the immigrant was in the U.S. is not counted in the substantial presence test calculus.

This law blog is written by the Taxation | Litigation | Immigration Law Firm of Coleman Jackson, P.C. for educational purposes; it does not create an attorney-client relationship between this law firm and its reader.  You should consult with legal counsel in your geographical area with respect to any legal issues impacting you, your family or business.

Coleman Jackson, P.C. | Taxation, Litigation, Immigration Law Firm | English (214) 599-0431 | Spanish (214) 599-0432

Asylum, Domestic Violence Victims and Credibility Hearings

By:  Coleman Jackson, Attorney
December 15, 2016

Asylum, Domestic Violence Victims and Credibility Hearings

Any foreign person who is physically present in the United States of America or who arrives here or is brought here regardless of their legal status may apply for asylum complying with the requirements set forth in 8 U.S.C.A.  §1158, Immigration and Nationality Act §208.

The foreign person seeking asylum bears the responsibility to establish that they are a refugee, within the meaning of U.S. Immigration Law.  Credible evidence will need to be presented that shows that the foreign person is a refugee within the meaning of the Immigration and Nationality Act under one or more of the following categories:

  1. RACE;
  2. RELIGION;
  3. NATIONALITY;
  4. MEMBERSHIP IN A PARTICULAR SOCIAL GROUP;  or
  5. POLITICAL OPINION

Asylum seekers must allege and demonstrate that at least one of the listed categories is the central reason for the past, or perceived future persecution in their homeland.  One of these five categories must be central to the asylum seekers’ past persecution or credible fear of persecution upon returning home.

In this blog post, we will limit our discussion of asylum to the asylum seekers membership in a particular social group.  In modern times in U.S. asylum law, victims of domestic violence have had success filing for asylum under the membership in a particular social group category.  This category has been used to apply for asylum based on gender-based persecution, such as, forced marriages, child marriages, female genital cutting, rape, domestic violence and sexual crimes against the victim.

If a foreigner enters the United States and claims persecution as a member of a particular social group, U.S. Department of Homeland Security examining officers at the border must conduct a credibility screening.  The standard used at the credibility screening is very low.  At this credibility screening the examining officer is not to make eligibility determinations or weigh the evidence or decide the credibility of the asylum seeker’s claims or statements.  The examining officer must decide whether to refer the asylum seeker for a credibility determination hearing or send them back to their homeland.  If the examining officer finds that the asylum seeker’s claim is not credible, they must expedite the removal of the foreigner’s return to their home country.  If the examining officer decides that the claim is credible, they must refer the case for a full asylum credibility hearing; the referring officer must give the asylum seeker Form M-444 and explain the purpose of the credibility determination hearing.  The asylum seeker may have legal representation at the credibility determination hearing.  In the credibility determination hearing, the demeanor, candor, and responsiveness of the asylum applicant (and witnesses, if any) are all relevant.  The basic logic and plausibility of the applicant’s or witness’s story are relevant to making the credibility determination.  Consistency in the applicant’s, witnesses’ oral and written accounts is extremely important factors in a credibility determination.  U.S. Department of State country condition reports are also used in asylum credibility determination hearings.

Even if the asylum seeker has a credible fear of persecution based on membership in a particular social group, their asylum application can still be impeded and denied pursuant to any of the factors listed in INA  §208(2)(A) and INA §208(2)(B).

In the event the asylum officer grants the asylum seekers application based on their membership in a particular group, the foreigner enjoys the following immigration benefits:

  1. They cannot be removed or returned to their home country (country of nationality);
  2. They may be authorized to work or engage in employment in the United States;
  3. They may be allowed to travel abroad with the prior consent of the U.S. Attorney General; and
  4. One year after the grant of asylum, the foreigner can apply for Lawful Permanent Residence status (Green Card).

Filing asylum is serious business and is complex.  Foreigner’s who are contemplating filing for asylum in the United States should consult legal counsel before they file because filing a frivolous asylum application will prevent the foreigner from receiving any immigration benefit under the Immigration and Nationality Act.  That means the foreigner would be prohibited from even visiting the U.S. for any reason.  This bar is permanent under the INA.

This law blog is written by the Taxation | Litigation | Immigration Law Firm of Coleman Jackson, P.C. for educational purposes; it does not create an attorney-client relationship between this law firm and its reader.  You should consult with legal counsel in your geographical area with respect to any legal issues impacting you, your family or business.

Coleman Jackson, P.C. | Taxation, Litigation, Immigration Law Firm | English (214) 599-0431 | Spanish (214) 599-0432

Check Your ITIN because it could be Expired or Expiring Soon

By: Coleman Jackson, Attorney, CPA
November 21, 2016

Check Your ITIN because it could be Expired or Expiring Soon

Individual Taxpayer Identification Number, otherwise known as (ITIN) allows taxpayers to meet their tax filing obligations who cannot obtain a Social Security Number.  An ITIN is typically used by nonresident foreigners , undocumented resident foreigners, dependents and spouses of U.S. Citizens and resident foreigners who cannot get a social security number, and nonresident students, professors or researchers filing a U.S. federal tax return or claiming an exception, and anyone else who has a tax reporting obligation but cannot obtain a social security number.  The ITIN, like a social security number, is a nine digit code.  The ITIN begins with the number 9 and has fourth and fifth digits ranging from 50-65, 70-88, 90-92, and 94-99.   These are the middle digits of the ITIN.   The ITIN does not grant the holder any legal rights to reside in the United States.  The ITIN does not grant the holder any right to work in the United States.  The ITIN is issued by the United States Treasury (IRS).  The ITIN is only used for tax reporting purposes.

ITIN holders beware!  Section 203 of the Protecting Americans from Tax Hikes Act of 2015 (PATH Act), which became law on December 18, 2015 made critical changes to U.S. Tax Law, 26 U.S.C. Section 6109 as it relates to the Individual Taxpayer Identification Number (ITIN) Program.  Because of these PATH Act changes, every ITIN holder must check their ITIN to determine whether it is expired or expiring soon.  The PATH Act made major changes in the ITIN Program which requires holders of ITINs to renew their ITIN.

Holders of unused ITINs must renew them or they will expire.  Any ITIN not used on a federal tax return for the last three (3) years.  Count back from the current year to the previous three tax reporting periods.  If it has been three years since the ITIN was used; it expires on January 1, 2017.  That means that if you hold an ITIN that was not used in 2015, 2014 or 2013; your ITIN is no longer valid and cannot be used when you file your 2016 federal tax return; unless, you timely renew it.  The IRS began accepting ITIN renewal applications on October 1, 2016 for taxpayers affected by the PATH Act.

ITINs issued before 2013 began expiring in 2016 on a rolling basis.  The mandatory renewal period for these ITINs is on what the IRS is calling a rolling basis.  The key numbers that triggers the expiration and mandatory renewal schedule as to when the pre-2013 ITIN renewal period began are the middle two digits of the ITIN.  For example, beginning October 1, 2016, ITIN holders with middle digits of 78 and 79 began renewing their ITIN. Every ITIN holder must examine their ITIN and the ITIN of family members (household members) to determine when their ITIN expires or expired based on the IRS rolling renewal schedule.

Holders of expired ITINs could have difficulty complying with U.S. tax laws.  They could be prohibited from claiming exemptions and dependents and so forth with expired ITINs.  Moreover, failure to timely file required federal tax returns carry serious consequences under U.S. tax laws, such as, civil negligence penalties, fraud penalties and potential criminal prosecution.  There could also be serious consequences under the Immigration and Nationality Act (INA) for failure to comply with U.S. federal tax laws (Internal Revenue Code).  Federal tax law abuse violates the terms of immigrant visas under the INA in certain circumstances.   ITIN holders must check their ITIN because the ITIN could be expired or expiring soon.

This law blog is written by the Taxation | Litigation | Immigration Law Firm of Coleman Jackson, P.C. for educational purposes; it does not create an attorney-client relationship between this law firm and its reader.  You should consult with legal counsel in your geographical area with respect to any legal issues impacting you, your family or business.

Coleman Jackson, P.C. | Taxation, Litigation, Immigration Law Firm | English (214) 599-0431 | Spanish (214) 599-0432

U.S. Immigration Petition Prices Set to Increase this December

October 27, 2016
By:  Coleman Jackson, Attorney

U.S. Immigration Petition Prices Set to Increase this December 2016

Have everybody heard?  It is official.  United States Citizenship and Immigration Services (USCIS) fees are set to increase effective December 23, 2016.  Applications and immigration petitions postmarked or filed on or after December 23, 2016, must include the new fees or be rejected by USCIS.  Some examples of the fee increase effect on some of the more popular applications and petitions are as follows:

Form Number

Form Title

Fee-Effective 12-23-2016

Current Fee

I-90

Application to Replace Permanent Resident Card

$455

$365

I-102

Application for Replacement/Initial Nonimmigrant Arrival-Departure Document

455

330

I-129/129CW

Petition for a Nonimmigrant Worker

460

325

I-129F

Petition for Alien Fiancé(e)

535

340

I-130

Petition for Alien Relative

535

420

I-131 /I-131A

Application for Travel Document

575

360

I-140

Immigrant Petition for Alien Worker

700

580

I-212

Application for Permission to Reapply for Admission into the U.S. After Deportation or Removal

903

585

I-360

Petition for Amerasian Widow(er) or Special Immigrant

435

405

I-485

Application to Register Permanent Residence or Adjust Status

1,140

985

I-485

Application to Register Permanent Residence or Adjust Status (certain applicants under the age of 14 years)

750

635

I-526

Immigrant Petition by Alien Entrepreneur

3,675

1,500

I-539

Application to Extend/Change Nonimmigrant Status

370

290

I-600/600A

Petition to Classify Orphan as an Immediate Relative /Application for Advance Petition Processing of Orphan Petition

775

720

I-800/800A

Petition to Classify Convention Adoptee as an Immediate Relative /Application for Determination of Suitability to Adopt a Child from a Convention Country

775

720

I-601

Application for Waiver of Ground of Excludability

930

585

I-601A

Application for Provisional Unlawful Presence Waiver

630

585

I-690

Application for Waiver of Grounds of Inadmissibility

715

200

I-694

Notice of Appeal of Decision

890

755

I-698

Application to Adjust Status From Temporary to Permanent Resident (Under Section 245A of the INA)

1,670

1,020

I-751

Petition to Remove Conditions on Residence

595

505

I-765

Application for Employment Authorization

410

380

I-824

Application for Action on an Approved Application or Petition

465

405

I-829

Petition by Entrepreneur to Remove Conditions

3,750

3,750

I-924

Application for Regional Center Designation Under the Immigrant Investor Program

17,795

6,230

I-924A

Annual Certification of Regional Center

3,035

0

I-929

Petition for Qualifying Family Member of a U-1 Nonimmigrant

230

215

N-336

Request for Hearing on a Decision in Naturalization Proceedings

640

595

N-400

Application for Naturalization

640

595

N-470

Application to Preserve Residence for Naturalization Purposes

355

330

N-565

Application for Replacement Naturalization/Citizenship Document

555

345

N-600/N-600K

Application for Certification of Citizenship/Application for Citizenship and Issuance of Certificate under INA Section 322

1,170

600/550

USCIS Immigrant Fee

220

165

Biometric Fee

85

85

The table of fees above does not list the names or filling fees for all immigrant petitions and applications.  Filing fee increases take effect on or after December 23, 2016.  New submissions must be submitted to the Department of Homeland Security (USCIS) with the payment associated fees attached.

This law blog is written by the Taxation | Litigation | Immigration Law Firm of Coleman Jackson, P.C. for educational purposes; it does not create an attorney-client relationship between this law firm and its reader.  You should consult with legal counsel in your geographical area with respect to any legal issues impacting you, your family or business.

Foreigners and Persons Purchasing and Selling United States Real Property Interests to and from Foreigners Must Consider U.S. Tax Consequences

By:  Coleman Jackson, Attorney, CPA
October 05, 2016

Foreigners are subject to United States tax laws under certain circumstances.  Resident and nonresident aliens (foreigners) are taxed differently under U.S. tax laws.

Here are realities effecting buying and selling United States Real Property Interests to or from Foreigners:  Foreigners are subject to United States tax laws under certain circumstances.  Resident and nonresident aliens (foreigners) are taxed differently under U.S. tax laws.

Resident aliens (Green Card Holders and foreigners meeting the substantial presence test) are taxed in the United States, generally speaking, the same way United States citizens are taxed under 26 United States Code.  Resident’s are taxed on their worldwide income, from whatever source, the same as United States citizens regardless where they reside and regardless where the income is earned.  Resident foreigners use the same tax tables as U.S. citizens.

Nonresident foreigners (foreigners who do not meet the substantial presence test or Green Card) are taxed based on the source of their income and whether or not their income is effectively connected with a United States trade or business.  Nonresident foreigner’s income from sources within the U.S. is subject to U.S. income tax and must be separated into two pools as follows:

a) Income that is effectively connected with a trade or business in the United States, and
b) Income that is not effectively connected with a trade or business in the United States

Income in pool (a) is taxed at the same graduated tax rates as applied to U.S. citizens. Income in pool (b) is taxed at a flat thirty percent (30%) tax rate or lower tax treaty tax rate.

Special tax rules apply to nonresident foreigners purchasing or selling United States Real Property interest.  Gains and losses from the sale or exchange of United States real property interests are taxed as if the foreigner is engaged in a trade or business in the United States.

Moreover, special tax withholding rules under 26 U.S.C. (Internal Revenue Code) requires under certain circumstances for buyers buying United States Real property from a foreigner to withhold taxes unless certain exemptions are applicable.  United States real property interest is defined as real estate located inside the United States, and includes amongst other things, residential single family homes, multi-unit dwellings, commercial buildings and so forth.  It is extremely important to consult legal counsel concerning tax law implications; and other not so obvious legal hazards, when buying United States real property interest from a foreigner.  Your typical real estate agent or broker is not a lawyer and cannot lawfully advise parties in a real property transaction regarding tax implications and other legal jeopardy concerns associated with real property interest dispositions involving foreigners.

What exactly is the withholding requirement associated with buying United States real property interests from a foreigner?  Internal Revenue Code Sec. 1445 (a) imposes a duty on buyers to withhold income tax on dispositions of U.S. real property interests involving nonresident foreigners.   The law imposes legal liability on the buyer for the tax due on the transaction if the buyer fails to comply with IRC Sec. 1445 (a).

Any buyer or transferee purchasing or exchanging a United States real property interest with a nonresident foreigner before February 17, 2016 must withhold a tax equal to 10% of the amount realized on the disposition.  For U.S. real property interests purchased or exchanged with a nonresident foreigner after February 16, 2016, the rate of withholding is generally 15% unless the property is going to be used by the buyer as a residence and the amount realized does not exceed $1,000,000.  In that case, the withholding tax remains at 10%.  These withholding obligations are the responsibility of the buyer of U.S. real property interests from nonresident foreigners; which means, buyers are exposed to potential tax liability or jeopardy if they fail to withhold the required tax in the correct amount at the time of closing the real property transaction.  The withholding requirement is based on the gross amount realized; which means, real estate commissions are not subtracted in applying the correct withholding tax percentage.

This withholding provision potentially creates a genuine conflict of interest between a buyer and their realtor or broker.  Likewise a conflict of interest could likely exist between a nonresident foreigner selling  U.S. real property interests and their real estate agent or broker,  especially involving the exemptions availability and selection of buyers .  It is probably prudent for buyer and seller of real property interest involving nonresident foreigners to have their independent legal counsel separate and distinct from their respective real estate agents or brokers because tax laws are implicated with potential for substantial financial consequences could have impact on real estate selling decisions by buyers and sellers of U.S. real property interest involving nonresident foreigners. Also, nondiscrimination laws in sale and purchase of real estate in the United States could impact these transactions.

But as for the exemptions to the withholding requirement; the following are very broad generalizations concerning exemptions that could apply (depending on all the facts and circumstances) to the withholding requirements of IRC Sec. 1445:

The buyer is not required to withhold any amount under Sec. 1445 (a) if one or more of the following applies to the transaction:

  1. The nonresident foreigner supplies an affidavit testifying that they are not a foreign person;
  2. Private domestic corporation supplies an affidavit testifying that their interests in the corporation is not an United States real property interests;
  3. IRS issues a qualifying statement to buyer (or seller) satisfying the requirements set forth in IRC Sec. 871(b)(1) or 882(a)(1);
  4. The amount realized on the U.S. real property interests transaction does not exceed $300,000 and the buyer intends to use the real property as its residence; or
  5. A wash sale is involved pursuant to IRC Sec. 8997(h) (5).

These exemptions have been abbreviated and only state the basic nature of the statutory exemption.  As with any statute effected parties must consult the applicable Internal Revenue Code Section(s), Internal Revenue Regulation(s), Revenue Ruling(s), Tax Court Opinion(s) and decision(s) of other Courts having interpreted and established precedence regarding how and when these tax withholding exemptions might or might not apply to withholding of tax on dispositions of United States real property interests involving nonresident foreigners.  Anyone buying or selling U.S. real property interest to a nonresident foreigner should perform their due diligence prior to entering an earnest money contract or any other kind of contract of purchase.  Likewise foreigners should perform their due diligence regarding applicable tax laws and other U.S. laws before entering into U.S. real property interest transactions involving nonresident foreigners.  Unintended tax consequences could lurk behind every U.S. real property interest transaction involving nonresident foreigners as well as exposure to unintended consequences of other state and federal laws governing disposition of real property interest.

This law blog is written by the Taxation | Litigation | Immigration Law Firm of Coleman Jackson, P.C. for educational purposes; it does not create an attorney-client relationship between this law firm and its reader.  You should consult with legal counsel in your geographical area with respect to any legal issues impacting you, your family or business.

Coleman Jackson, P.C. | Taxation, Litigation, Immigration Law Firm | English (214) 599-0431 | Spanish (214) 599-0432

Consequences to Employers Who Hire Undocumented Workers

September 16, 2016
By:  Coleman Jackson, Attorney

D:\Surat-work\cjacksonlaw.com\SEO\13.Apr.2015\Blogs\Sep 2016\Real Consequences to Employers Who Hire Undocumented Workers

Immigration law imposes certain hiring requirements on employers under the Immigration and Nationality Act (INA) section 274A.  The law requires every employer to maintain up-to-date Form I-9 demonstrating that they are in compliance with their responsibility to ensure that workers hired or recruited are authorized to lawfully work in the United States.  Hiring undocumented workers is illegal in the United States. 

Violations of these hiring requirements could lead to civil fines, criminal prosecution; debarment from government procurement contracts, and possibly violation of anti-discrimination laws which prohibit discrimination against workers based on nationality.

In addition to the legal jeopardy employers face who hire undocumented workers, from a practical perspective, publicly disclosed Form I-9 audit investigation information gives competitors a wealth of information, some of it quite proprietary and quite often this publicly disclosed I-9 investigation information is used by competitors to poach customers or otherwise secure competitive commercial advantage over companies suspected of hiring undocumented workers.    Competitive disadvantage is a very real possibility for an employer being investigated by Immigration Customs Enforcement suspected of hiring undocumented workers.

Companies who rely on government procurement contracts as a main stay of their revenue stream, also-  in the real world- has an awful lot to lose when hiring undocumented workers.   Government contract violators can be debarred from any future participation in government procurement which could mean bankruptcy for the offending government contractor.

So, from a real world perspective, the biggest dangers of non-compliance with immigration employment laws governing hiring undocumented workers under current U.S. Government immigration enforcement practices are (a) debarment of government contractors and (b) loss of competitive advantage due to disclosure of private company information to competitors and disparagement in the public eye.

For the last few years, criminal penalties don’t seem to be the weapon of choice in enforcement of Form I-9 regulations.  But this could change!

Over the last few years, civil money penalties have been the legal weapon used with regularity to enforce Form I-9 prohibitions against employers hiring or continuing to employ a person, or recruiting or referring for a fee a person, knowing that the person is not authorized to work in the United States are as follows:

Civil Violations First Offense   Second Offense   Third Offense  
  Minimum Maximum Minimum Maximum Minimum Maximum
Hiring or continuing to employ a person, or recruiting or referring for a fee, knowing that the person is not authorized to work in the United States. $375 for each undocumented worker $3,200 for each undocumented worker $3,200 for each undocumented worker $6,500 for each undocumented worker $4,300 for each undocumented worker $16,000 for each undocumented worker

Employers desiring to expand its work force by use of foreign labor need to make all efforts to do so legally by filing proper immigration petitions with the Department of Homeland Security and  obtaining certifications from the Department of Labor (when required).  Under current immigration laws, there are regulations and procedures by which an employer can legally hire temporary and permanent skilled and unskilled foreign workers.  Employers can pursue these processes with counsel of an immigration attorney.  Finally, employers should annually review their Form I-9 practices and policies under the watchful eye of an immigration lawyer to ensure compliance with employment immigration laws against hiring, recruiting or continuing to employ undocumented workers to limit or minimize their exposure to the civil, criminal, public shame, and competitive disadvantage risks we discuss in this blog.

 

This law blog is written by the Taxation | Litigation | Immigration Law Firm of Coleman Jackson, P.C. for educational purposes; it does not create an attorney-client relationship between this law firm and its reader.  You should consult with legal counsel in your geographical area with respect to any legal issues impacting you, your family or business.

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