USWorkVisa.com News Archive
for August, 2008

With E-Verify set to expire in November, some lawmakers feel there is insufficient time to do anything other than pass a 5-year extension. “We’ve got six weeks left in this session, and we’re just not going to get that done,” said Rep. Zoe Lofgren (D-Cal.). She and Rep. John Conyers (D-Mich.) are moving a bill for a 5-year extension through the House of Representatives. It is unclear whether the Senate will agree. Any reform of the verification process will have to wait until the next administration.

The new “exit tax,” under the Heroes Earnings Assistance and Relief Tax Act of 2008, applies only to U.S. citizens who expatriate and long-term (eight years or longer) permanent residents who lose their status (voluntarily or otherwise) on or after the date of enactment, which was June 17, 2008. The prior tax law continues to apply to U.S. citizens who expatriated and long-term residents who lost their permanent resident status before June 17. The new exit tax may prove to be a major deterrent for wealthy individuals who are considering applying for permanent residence.

The Reed Amendment exclusion ground for U.S. citizens who expatriate to avoid paying U.S. taxes was not repealed or modified (as proposed in some earlier versions of the exit tax). There are no regulations to implement it, however.

The exit tax includes a capital gains tax on the unrealized gain in a covered expatriate’s worldwide assets, and a transfer tax on all gifts and bequests from a covered expatriate to any U.S. person during the life or upon the death of the covered expatriate. A “covered expatriate” is a person who gives up U.S. citizenship or loses permanent resident status (having held it for at least eight of the past 15 years) and who: (1) has a net worth of more than $2 million; or (2) had average U.S. federal income tax liability of more than $139,000 over the past 5 years; or (3) fails to certify under penalty of perjury that he or she has complied with all federal tax obligations for the past five years. There are limited exceptions for dual citizens from birth and persons who expatriate before age 18½.

The exit tax is a major deterrent for wealthy individuals who are considering permanent resident status, and a potentially huge tax penalty for permanent residents who wish to leave the U.S. or have already done so. It is already prompting wealthy individuals who have held permanent resident status for less than eight years to surrender their green cards before they become subject to this tax. In such circumstances, several nonimmigrant visa options permit long-term residence in the U.S. without exposure to the exit tax.

The Department of State’s Visa Bulletin for August notes that the employment-based second preference (EB-2) visa category for India and China has advanced to June 1, 2006, a jump of more than two years. Meanwhile, demand for visa numbers has resulted in the employment third preference “Other Worker” category reaching the annual fiscal year 2008 numerical limit. As a result, this category has become unavailable beginning in August and will remain so for the remainder of FY 2008. This will be temporary, however, and the employment third preference cut-off date will return in October, the first month of the new fiscal year, to January 1, 2003. Other employment categories are not expected to move in August.

The Department of Labor seeks comment on the labor condition application (LCA) for H-1B, H-1B1, and E-3 nonimmigrants. The modifications being proposed to ETA Forms 9035, 9035CP, and 9035E are primarily due to the elimination of the “Fax Back” system and converting exclusively to the electronic submission system, except in rare cases of physical disability that prevents use of a computer. The Department noted that all three forms need to be updated to eliminate all reference to the “Fax Back” system and “provide more clarity to the user of the form, thereby obtaining more accurate information for the Department to assist in more efficient and effective adjudication of the requested benefit.” The Department said the information collected remains the same. The Federal Register notice related to the LCA is available as PDF.

The Department of State’s Bureau of Consular Affairs has released the annual update of its student and exchange visitor (F, M, and J visas) issues. The cable asks posts to have a clear procedure in place for expediting F, M, and J appointments, with first-time applicants being given the highest priority. The cable also discusses summer work and travel issues, clarifies some information on Form DS-2019, and reminds posts about required annotations and the end of requirements to put DS-2019 forms in sealed envelopes. The cable also notes the changes in J-1 sponsor sanctions procedures.