EB-5 Visa & Form 3520 Reporting Requirements, Common Examples

EB-5 Visa & Form 3520 Reporting Requirements, Common Examples

EB-5 Visa & Form 3520 Reporting Requirements 

For taxpayers who are not considered US persons for tax purposes but seek to become a US person and obtain a green card, one of the fastest methods for doing so is by applying for an EB-5 visa. The EB-5 Investment Visa is a visa in which a taxpayer makes a substantial investment in the United States’ economy, and then they are essentially fast-tracked into becoming a permanent resident. Informally, this is referred to as a ‘Golden Visa’ and several countries offer Golden Visa opportunities to become either a resident or citizen of that country. Where it can get complicated is how the money is transferred to the United States, whether the transfer is a gift to a U.S. person, and whether a Form 3520 is required.

*For all examples, please note that the Taxpayers are U.S. persons for tax purposes who have not made any treaty elections to be treated as a Non-Resident Alien (NRA). Also, these examples are for illustrative purposes only and Taxpayers should consult with a Board-Certified Tax Law Specialist if they have specific questions about their reporting requirements and not rely on this article for legal advice.

Common Examples of EB-5 Form 3520

Let’s take a look at a few common examples that we see often at Golding & Golding:

• • • Direct Transfer to Regional Center/Investment: Adam is a foreign national who applied to the EB-5 visa program. He does not have any family members in the United States and therefore when he applies for the visa, he transfers the money directly from overseas into the US investment. In this type of situation, there is presumably no Form 3520 requirement.

    • Transfer to U.S. Relative: Brenda is a foreign national whose daughter currently resides in the United States on an F-1 visa. Brenda decides that she wants to apply for an EB-5 visa, and she transfers the money to her daughter which is then transferred directly to the investment. The U.S. relative is simply used to facilitate the transfer and was not actually gifted any money. This is presumably also not a Form 3520 situation because there was no gift to a US person.

    • Gift and Transfer: Charlie is a foreign national who has two children that currently reside in the United States on F-1 visas (post-5 years). The family decided that they wanted to apply for an EB-5 visa and ultimately become green card holders. Charlie gives his children the money to invest under the EB-5 visa requirements so that the children can apply for the EB-5 visa. In this situation, Charlie’s children may have to file a Form 35 20, because they are US persons who received their gift from Charlie to invest in the program. Even though Charlie’s children may not have touched the money personally, they did receive the gift and Form 3520 may be required.

    • Loan and Transfer: using the facts from the prior example, let’s say instead that Charlie transferred the money to his children in the United States as a loan with every intention of the children paying back the money to him. If this was a legitimate loan, then there would be no Form 3520 issue because Charlie did not gift the money to his children but rather loaned it to his children. If later down the line Charlie forgives the loan, then at that time it could become a gift requiring Form 3520 filing.