USCIS Proposes Rule to Welcome International Entrepreneurs
uscis.gov
uscis.gov
As an international founder who has had to suffer the stresses of dealing with US immigration while building a company based in the states, this is incredibly welcome news.
"The proposed rule is open for public comment for 45 days, allowing stakeholders to provide valuable feedback to DHS before the final rule is ultimately published. (We encourage you to read the details and submit your comments.)"
And from the proposal [0]:
"You may submit comments directly to U.S. Citizenship and Immigration Services (USCIS) by e-mail at uscisfrcomment@dhs.gov. Please include DHS docket number USCIS-2015-0006 in the subject line of the message."
[0] https://www.uscis.gov/sites/default/files/USCIS/Laws/Article...
-Is it reasonable to limit this to only 3 founders per company, or should it be 4?
-Reasonable for a successful founder to own at least 10% at the end of the 2 year period (which could be 5 years after founding the startup)?
-Reasonable to require $345k within the 1st 3 years to qualify? Too much capital?
-Is $500k annual revenue with average annualized revenue growth of at least 20% a good minimum requirement for proving "substantial and rapidly increasing revenue"?
-Will certain industries like biotech or medical devices be harmed if there is a requirement that the investor funding and application must occur within the first 3 years after founding? Are there some types of companies that take longer to get traction?
-Is winning pitch events or other competitions a good indicator of potential for rapid growth and job creation?
-Does getting into an incubator show a potential for success?
Thanks Sophie Alcorn
My blogs about this program: http://alcornimmigrationlaw.com/international-entrepreneur-r...
An international founder probably wants to come to the states for funding and scaling. Having pre-conditions on both scale and funding seems like a chicken and egg. Requiring funding rules out all bootstrapped businesses which are likely candidates.
> $500k annual revenue
The conditions feel like they select for small businesses like restaurants but filter out the potentially massive ones e.g. pre-revenue consumer facing like Facebook / WhatsApp or R&D heavy businesses like Biotech. Neither of these may see revenue in the first few years but have evidence potential in user growth, engagement or scientific achievement.
> Is winning pitch events or other competitions a good indicator of potential for rapid growth and job creation?
> Does getting into an incubator show a potential for success?
If a founder is wanting to relocate from a non-startup friendly region then neither of these are may have been available. IMHO both competitions and second-rate incubators are "playing at business" and distractions from the truly necessary steps.
Usually, "us taxpayer" status is only triggered with a proper visa (H1B, L1, O1, etc.) or permanent resident status (green card). I've never met any mention of tax status on parole.
To someone who has any non-trivial financial life outside the US (which I expect to be true for most people who would apply for this), a us taxpayer status is a horrible curse:
You might get a call from your bank/broker/insurer back home, telling you that they have to close all of your accounts except perhaps a checking and 1 simple saving (and perhaps those too). If you accrued any benefits in your pension plan, you have to report them each year _and_ plan to pay yearly and/or dearly (because it is a PFIC[0]) for any profit made in that account, even though you cannot touch it for 30 years.
Also, if you own another business outside the US -- e.g. you had a previous startup, or operated through some kind of personal LLC providing services -- the "us taxpayer" status means that you have to start filing financial reports to the IRS as if those business were operated in the US (that is, according to US financial standards, regardless of where it operated - and that might mean double taxation despite any treaties in place).
Sure, you can just ignore it, and if your startup fails, no one will come after you. But of course, you plan to succeed, so be sure to read on PFICs, FATCAs, FBARs, and consult a US accountant that specializes in international taxation.
As a general rule, the US tax system assumes any financial dealings you have outside the US are an attempt to evade taxes, and penalizes that (whether by forms or by actual tax). Once it is assumed you plan to make the US the center of your life (green card, H1B, L1), those assumptions, through the "us taxpayer" status, affect you. If it is assumed you won't stay (e.g. F1 visa for studying), they don't.
So, what taxpayer status will parole put you in?
[0] https://en.wikipedia.org/wiki/Passive_foreign_investment_com...
Usually you just have the "substantial presence test" to determine if you are a us taxpayer. which is : If you spent >180 days in the US this year, you are considered resident for tax purposes. Otherwise you're non resident.
Visa like the Student visa give you a 5 year exemption, where during that time you only have to report money made in the US, it would be great if that entrepreneur parole status had the same rules.
I tried quickly looking for keywords (IRS, tax, substantial, resident, non-resident) in those 155 pages of proposal but couldn't find anything.
People writing comments to the DHS docket should discuss this.
QualifyingDaysThisYear > 31 AND
QualifyingDaysThisYear + 1/3(LastYear) + 1/6(YearBefore) > 183
For further information: https://www.irs.gov/individuals/international-taxpayers/subs...
Running a start-up by spending only a few hundred days a year in the US could be challenging, but if the law allows you to, why not.
F/J (Idk anything about M/Q/A/G) are only exempt 5 years. I have friends who did their undergrad and are on their Phd on F-1 who are still on F-1 but are now considered "us resident for tax purposes" because the 5 exempt calendar years are now used up, so they fall back to the 183 days rule.
Starting on 1/jan and finishing on 31/dec would make you a taxpayer each of the 2..5 years.
Starting on 1/jul and finishing on 30/jun, taking strategically timed trips outside the US could easily make the first year, and in some cases the last year, fail the substantial presence test.
I always find it surprising that people rarely optimize tax when moving between countries (or for that matter, even when starting a business in their country). Some do, of course, but as a general rule most don't -- even though to a person in technology, taxes are by far the largest expense, often 30-50% of the take home.
Especially when being a business owner (much less so as a salaried employee), changing your tax jurisdiction is likely to result in much worse taxation than you'd expect unless you optimize for it. Even when there are tax treaties, you can easily get doubly taxed by differing classification -- e.g. something that is regarded as a capital gains in one jurisdiction but ordinary income in the other, or e.g. preferential treatment to 401K-equiv in one jurisdiction causes PFIC-equiv treatment in the other.
Certain visas (specifically A, G, F, J, M, Q) are exceptions to the general rule. For example, the F (student) visa allows you to treat yourself as a non-resident for tax purposes for up to 5 years.
But everyone else, including undocumented immigrants all get treated as "U.S. residents for tax purposes" once they meet the timeline for the substantial presence test.
Once you receive a green card, tax days retroactively go back to the first day in which you were legally in the country that year in the status that switched you to a green card - even if you fail the substantial presence test; e.g., you get married to an american citizen outside the US, you both move into the US on 1-Apr, apply for a marriage-based green card, move out of the US a month later*, come back december 20th and receive the green card -- at that point, even though you only spent 40 days in the US (thus failing the substantial presence test), your "us tax payer date" goes back to 1-Apr, which would make you a (partial year) US tax payer for 8 months.
How that interacts with visas or parole, I have no idea, but I know someone whose tax issues were very complicated because of such an issue.
I guess you are right in that the substantial presence test is the default, and some visas have exceptions one way, and green card the other - but I would urge anyone who might be affected by these issues to be very very diligent with respect to tax laws.
And .. we haven't touched state tax laws, which are similar but not exactly the same as federal laws (and vary between states). And there's also the concept of domicile, which makes everything even crazier.
EDIT: from the medium link posted in another comment by yurisagalov:
> DHS will also publish guidance to clarify when entrepreneurs may self-petition for lawful permanent residence (also known as a “green card”).
EDIT2:
> That entrepreneur will have the confidence of knowing whether she is eligible for the temporary “parole status” pathway, allowing her to start growing her company here right away. Later, she will know under what circumstances she may qualify for the green card pathway, if she is successful in creating jobs for U.S. workers and attracting more capital from U.S. investors, allowing her to become an American over time. (Note that these pathways will likely also be open to "bootstrap" entrepreneurs who are successful in generating revenue from U.S. customers, without needing to rely on external financing.)
(From https://www.whitehouse.gov/blog/2014/11/26/entrepreneurs-wan... )
If your business fails and you invested 5 years of your life, you are kicked out of the country and have to move your family and everything back to wherever you came from. This big uncertainty of the future is, in my opinion, a huge negative of both H1B and this parole.
If they made it a separate quota for entrepreneurs then you could get most people a green card within that timeline.
Agreed. However, since you can't self-petition in most cases, it is unclear if you have a path or not.
https://travel.state.gov/content/visas/en/law-and-policy/bul...
For India/China natives on EB-2 or EB-3 categories, I agree.
For all the others, being able to self-petition for the green card as an entrepreneur means you won't need a company to sponsor you. (or your own start-up is sponsoring you?), and the full process could be done in less than 5 years. The downside here would be the legal costs and hassle associated with it that you would have to take care of.
Yes, welcome to 2016.
A significant portion of talent that used to earlier fall in H1B->(Eb2/Eb3) category has now grown up in life and also gone up the corporate ladder to only come back and (re)apply as multinational managers/executive in the EB1C category.
No matter what the USCIS tries to do now it cannot make up for the pile of shit (at the cost of anxiety and torture of millions of legal immigrants) accumulated in the past fifteen/twenty years. The beast is simply too big.
[1] money.cnn.com/2016/08/19/technology/eb1-visa-india-china/
Will he ask whistleblowers to step forward? Perhaps deport these "extraordinary individuals" and hand over their green cards to the actually deserving ones in the queue? Or is the number of affected people too small to matter?
Many people on message boards rarely seem to appreciate the actual pull of a person like Trump. Very few people actually want to support Trump, but the system badly needs a shake-up, even one that might well be too arbitrary and might negatively affect more people than it helps. The alternative feels like being the frog boiling in water.
While I am on the matter, I would also comment that the H1B visa lottery mess itself can be cleared quite quickly by someone who is not catering to lobbyists. Ask the ones who obtained their higher degree in the US if they genuinely think there are more people who are qualified to get the visa than the number of people who actually receive it - that is, does it make sense that there would be a lottery for the visa?
I know this opens an entirely new can of worms - why does getting a degree in the US give any more credibility? Here is a not very PC answer: being a student in the US actually gives you a chance to understand the culture and work ethic which makes the US what it is, which is almost 100% lacking in people who suddenly find themselves in the corporate environment of a completely different culture from their country, don't particularly care for assimilating, and often cause a lot of questions to be raised about whether the H1 visa is actually serving its designed purpose.
It does not! And probably never will. A lot of people who I know went on to get a phd because of lack of options or because of frustration and failure in corporate life. The latter is statistically a sizeable number; consider unless the kid in your class went off immediately after school.
Whereas a multinational manager is usually directly contributing into the US economy for years with sweat and hard work, including engineering and research -- if needed, for their business to survive and grow. I'd rather say they gather and implement more according to the culture and edge it off with cultural gaps between the host country and their own. Of course now we're entering a class war. :-)
With all due respect to the multinational manager who may be extremely good at what they do, everyone knows that there is still some pretty drastic exploitation of the process going on if they are actually coming in under the EB1 category. Here is an easy test: these individuals will very rarely openly discuss exactly why they qualified for an EB1 (if they even willingly talk about it) - and I am fairly certain the deserving ones in the category will feel no such compunctions. Here is another - you can usually find scores of people with exactly the same qualifications as these multinational managers if you actually bother to probe further.
Having said that, I do think the system is too far beyond reform at this point, and people would be much better off trying other countries to showcase their talents, including their own.
I'd love it to be the case. My market is almost entirely based in the USA. I'm in Canada, but have no legal method to do any work in the US. So it's all remote now.
I could hire employees, but it would involve doing a whole new business model purely for the sake of a US visa.
Founders also wouldn't have to get a certified LCA or meet minimum wage requirements, which can be pretty costly for a startup and is less relevant in case of founders (who are not taking anyone else's jobs or lowering average wages). And generally founders would probably prefer (and have more to gain from) spending that money to grow the company.
I suspect there are downsides to paroles vs visa (like fewer rights or difficulty obtaining green card/other visa types later maybe?), but this seems like a surprisingly good proposal to fix an acute issue.
It seems to be a trend for the US to make the immigration experience more and more demeaning in practice.
In the old days when this country's government worked you'd see a new visa category created and USCIS able to keep processing times within reason.
Nobody should take this proposal as an example of the system working.
I certainly agree, but it's a great example of how hacking a broken system works :)
"And while there is no substitute for legislation, the Administration is taking the steps it can within existing legal authorities to fix as much of our broken immigration system as possible" https://medium.com/the-white-house/welcoming-international-e...
Go Obama!
Relative to the effort of getting an O1 or chancing your fate to the H1-B lottery this is huge.
https://www.uscis.gov/sites/default/files/USCIS/Laws/Article... (PDF, 649 KB, 155 pages)
The sections most relevant to those who wish to apply under this rule would be:
IV. Proposed Changes
A. Overview of Parole for Entrepreneurs (pages 30 - 32)
B. Criteria for Initial Parole (pages 32 - 52)
1. Recent Formation of a Start-Up Entity 2. Applicant is an Entrepreneur Who is Well-Positioned to Advance the Entity’s Business 3. Capital Investment or Government Funding Criteria
C. Application Requirements for Initial Period of Parole (pages 53 - 61)
1. Filing the Application for Entrepreneur Parole (Form I-941) 2. Requirement to Appear for Submission of Biometric Information 3. Income-Related Condition on Parole 4. Adjudication of Applications 5. Limitation on Number of Entrepreneur Parolees Per Start-Up Entity 6. Authorized Period for Initial Grant of Entrepreneur Parole
D. Employment Authorization (pages 61 - 66)
1. Employment Authorization Incident to Parole with a Specific Employer 2. Employment Authorization Eligibility for Spouses 3. Documentation for Employment Eligibility Verification (Form I-9)
F. Re-Parole (pages 67 - 84)
1. Criteria for Re-Parole 2. Application Requirements for Re-Parole 3. Ensuring Continuous Employment Authorization 4. Technical Changes
G. Termination of Parole (pages 84 - 87)
1. Automatic Termination 2. Termination on Notice
H. Automatic Adjustment of Investment and Revenue Amount Requirements (pages 87 - 88)
V. Statutory and Regulatory Requirements
C. Executive Orders 12866 and 13563
3. Population of Entrepreneurs Potentially Eligible (pages 103 - 116)
In 3-5 years we'll probably hear founders tell stories about how this new rule allowed them to establish very successful companies in the US. That should help prove the value of a proper founder visa and (assuming the immigration system is still broken at that time) pass legislation to fix it.
That's why downtown Palo Alto has all those rug stores.
There doesn't appear to be any specific language in the actual document outlining the rules changes, but it does say DHS would retain the right to terminate the parole at any time without prior notice and in DHS' discretion (pg. 84 in the PDF).
Looks like a little bit of gray area, unless there is some language in there about the parolees responsibilities to maintain the conditions under which the parole was granted and consequences if the parolee does not. I couldn't see anything like that during a quick read through the document.
1. $345K from private investors.
2. $100k from govt or Federal entities.
3. partially satisfying the above criteria(up for a toss with uscis).
Some nascent YC potential companies might still loose out but nevertheless theres some glimmer of hope. Hope the rule gets published.
I am drafting a response from a nonprofit research organization and H-1B cap-exempt employer perspective:
https://www.eventbrite.com/e/lets-discuss-proposed-rule-by-u...
or SMS text WHOMENTORSDOTCOM to 50500 to obtain my contact information.
This year, my organization endeavors to maintain a relationship with startup founders of a startup that would not otherwise be a qualifying institution to work part-time on-site at the non-profit research organization anywhere in the USA.
"You may submit comments, identified by DHS Docket No. USCIS-2015-0006, by any one of the following methods:"
Web: http://www.regulations.gov Email: uscisfrcomment@dhs.gov Mail: Department of Homeland Security, 20 Massachusetts Avenue, NW, Washington, DC 20529
This is a parole rather than a visa, so it still leaves the question on what's the follow up afterward.
I'm about the farthest thing there is from a SJW, but have you considered how people will interpret your use of the slang "`murican"?
To me, it sounds like a reference to a meme which paints persons from the southern part of the U.S. as parochial and unintelligent.
Have I misunderstood the reference?
In any case, that's not what I intended. My usage of "'murican" would have been closer to the joke about Canadians always apologizing than your reading.
>Receiving significant investment of capital (at least $345,000) from certain qualified U.S. investors with established records of successful investments
Not sure what does the qualified US investors mean though. Would seed funding/angel funding from individuals not be considered for this? I guess this has been added to avoid abuse by wealthy foreigners, but how do they determine the qualified individuals or companies?
Accredited Investor:
- net worth, or joint net worth with the person's spouse, that exceeds $1 million or
- income exceeding $200,000 in each of the two most recent years or joint income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year
If you're on the success path then getting an O1 should be very straight forward, and then a EB1 greencard should also be easy.
If you're a failure, well - this isn't supposed to be a path to citizenship for people with failed businesses.
"The E-2 nonimmigrant classification allows a national of a treaty country (a country with which the United States maintains a treaty of commerce and navigation) to be admitted to the United States when investing a substantial amount of capital in a U.S. business" https://www.uscis.gov/working-united-states/temporary-worker...
In any case more options is better for people seeking to start a business in the US (even people who are not paroled will benefit from not having to compete with paroled entrepreneurs over the same limited number of visas).
How will they measure this? It's so subjective.
I have seen many successful startups found in other countries (such as China) Alibaba, Tencent, etc.
Is this a push that all talented software engineers HAVE TO move to the bay to become successful?
I'm very doubtful on that claim.
However, if you are startup, then startup == growth, which means having access to lots of capital, fast. Therefore, you should move to where there's an abundance of money, harboring people with just the right mindset to invest.
Right now it's the best time in the last 15 years in mainland China to seek VC.
# Thanks for trying, EU, but you're nowhere near there yet, and those language barriers aren't going anywhere anytime soon either.
A fresh grad in the Bay earns more than a 40-year-old director of engineering in Toronto.
Looks like the proposed parole is quite similar to L1 except instead of foreign company there's foreign private person direct relationship.
It doesn't look like it. Referring to the type of business that can have significant revenue, but doesn't need investment or even necessarily employees.
The fact of the matter is most foreigners complaining about not being able to start businesses in the US don't have profitable or well funded businesses. The ones that do have profitable and well funded business can easily set up shop on US soil and don't need to immigrate here and can use L1 visas when they do need to come state side.
To me the most interesting aspect to this visa is it takes away the talking point from the H-1B proponents that immigrant workers are job creators because immigrants start companies that employ citizens.
"Under this proposed rule, DHS may parole, on a case-by-case basis, eligible entrepreneurs of startup enterprises"
I think this is different from visas where the applicants/petitioners have at least some legal rights: The USCIS are probably aware that some people are gaming the current visa system, but they may be "forced" to approve visa petitions if all the criteria are met - even in cases where they're obviously not in "the spirit of the law".
The USCIS can likely just refuse to give parole under the new rule if they think someone is abusing the system - and blacklist any startup investors they believe is aiding in such behavior.
You prediction may be right, but I think there's reason to be optimistic. The rule can also be changed more easily than laws if abuse is detected while providing valuable data that can guide future startup visa legislation.
Try setting up shop in Shenzhen, China. Just spent a week over there. It is truly a Hacker's Paradise.
You can validate your ideas and get an MVP out in much faster time than the USA. You can be close to your eventual supply chain when you do make it big. It may sound a bit like premature optimization but the advantages are huge.
Of course, it will not hurt to learn a bit of Chinese (Mandarin) if you do decide to take that route. At least start with a few useful phrases to help break the ice. 'Ni Hao' (Hello); 'Xie Xie' (Thank You) and 'Duo Shuo Qian' (How much does it cost?). Learning the number system will also help know what the price is.
I spent a lot of time in the Huaqiang Bei and LoWu malls.
A special shoutout to Andrew "Bunnie" Huang for his 'The Essential Guide to Electronics in Shenzhen'[1]. It was invaluable.
Another shoutout to my Mandarin teacher Larry Xue and the San Jose Learning Center.[2] Attending his classes made me so much more confident that I could manage there even with the language barrier.
1. https://www.crowdsupply.com/sutajio-kosagi/the-essential-gui...
In some documentary of some Chinese factory on Youtube, they showed an employee bicycling to a supplier to get more parts.
Coming and setting up in the US is no easy matter for people of Indian or Chinese origins.
I am currently only at the investigative stage. I will let you know as soon as I know more about bureaucratic obstacles.
1. https://www.amazon.com/Shenzhen-Insiders-Guide-Never-Ever/dp...
Only be in China if you REALLY need to be there, otherwise it's a whole lot of pain without corresponding upside.
Sean, my Mandarin/Chinese is at below beginner's level. My google translate of your phrase is 'no way'. Was that what you were saying?
1. https://www.justice.gov/criminal-fraud/foreign-corrupt-pract...
FCPA applies not just to Americans, but anyone who does business in the USA, so even non Americans can be caught up in it, and many developed countries have their own versions of it.
I don't think bribes fly around so easily these days. At least nothing overt, though the Chinese partner they thrust on you is often just a backdoor bribe that looks legit on paper.
After 2 years, 3 years extension - Atleast 10% ownership and active role in startup - Atleast $500K additional funding OR $500K revenue with 20% growth OR 10 Full time Jobs
0
In this case, you can get an EAD for your spouse as soon as you get your parole.
So would this "startup visa" help in anyway in that initial stage of founding a startup?
USCIS can't really go interview lots of people for each decision to decide who's "good". They mostly have to rely on submitted documents, and there's no document you can submit to provide high confidence you're not a criminal.
If you charge $100 an interview, you can interview as many people as you want. It would be a better job program than the TSA.
Do you have any specifics of what you think they didn't miss, given that you're the one who has supposedly talked to the sponsors of the legislation?
Legislation, like code, should be considered buggy until proven otherwise -- but with the complication that the people who write legislation aren't necessarily interested in fixing the bugs in it.
Since the amounts involved are pretty small (15% ownership of a company that has received at least $350K in funding) there seem to be no end of ways for to make it happen. Six Chinese (say) dudes each pay $100K to some guy who is a "qualified investor" in the US, who invests $350K in a Chinese restaurant and makes them each 1/6th owners. Bam, hello US residency for all involved.
Borrow against your Google shares and make it rain on the State Department!
The Internet has ruined me.
That said, the proposed rule might mean if one gets into YC/techstars, etc. they would be able to get a visa for the US easily.
The limited term and renewals do raise some flags. But I guess if you are successful with your startup in the given time period, you can apply for a green card through other categories like Extraordinary Ability, etc.
Care to explain the reasoning? It seems shortsighted to limit this proposal to people with advanced degrees, and why only from the top 50 schools in the world? How does this make sense in the context of startups?
> That said, the proposed rule might mean if one gets into YC/techstars, etc. they would be able to get a visa for the US easily.
The article mentions that this is not a visa, but parole. And with the requirement of $345K in funding, getting into YC/Techstars would not be sufficient. Startups would need to raise additional money, unless they receive $100k from the Government.
With convertible notes that are sometimes given to member companies of distinguished seed funds, I think getting to 345K isn't a stretch.
Why?
Govt shouldn't be in the business of selecting 'best people', govt bureaucracy is not the right agent for this. Markets should decide who is the 'best' and who is needed . Govt should play the role of glorified recruiting agency.
Getting a degree is not a proof enough for visas/greencards.
If the idea is to attract entrepreneurs, what would be the point? There are already plenty of options for people on traditional career paths -- and that's what an advanced degree from a top university is fundamentally all about these days. (Just ask Chinese parents.)
> That said, the proposed rule might mean if one gets into YC/techstars, etc. they would be able to get a visa for the US easily.
Which is HARD and a very small pool. The executive could pardon those people one on one if they wished, as there are so few of them. Plus, if they are accepted by YCombinator, that's a very very strong case for a O1, just need to cross a couple other Ts.
I don't.
I didn't do very well at school. Wasn't for me. As soon as I left and I started work at 16, I excelled.
Now, I could choose to work for a company in London @ +£120k a year or even apply to the US. But I choose to launch my own start-up instead where my passion and technical ability can potentially lead to 7/8+ figures salary. With this, I am definitely looking at the US primarily instead of secondary!
The only requisite here is that your start-up succeeds and through the company can satisfy the required amount of jobs.
My google fu isn't great right now, but 2 examples I can think of that didn't do well at school either. I hope they are correct. Richard Branson and Sir Alan Sugar.
> A few years ago, I noticed that Britain would give a blanket visa to anyone with an MBA from a list of top international schools. How about something like that for people with Masters/PhDs (in STEM) from top-50 schools in the world.
Great. Then make this another type of visa then. Don't penalise the individuals like myself who through self-tuition and hard work can start up a company and try to make it a success without an university education and sheer will.
Your underlying point is valid--a founder having an advanced degree in STEM has little bearing on the success of a startup. So if the goal of the US is to encourage entrepreneurship, and small business growth, focus requirements on those traits that are tied to success.
Addressing the lack of STEM in the US should be a separate visa program that is appropriately prioritized for that purpose.