Marcum can assist the EB-5 investor in gathering all of the data necessary to prepare the Source of Funds Report. This process will include completing an interview questionnaire that will be provided to a local Marcum office or Leading Edge Affiliate in the investor’s home country. The interview questionnaire will request from the investor all the necessary data required by the US government.
Marcum will then review this data prior to submission in order to ascertain its completeness and accuracy. Marcum will also coordinate with and assist the investor’s immigration attorney to make sure that the immigration process proceeds as seamlessly as possible.
EB-5 Regional Center Services
- Assist Regional Center in design of accounting system including internal controls.
- Accounting services to investors pertaining to the transfer of funds.
- Assist management with compliance applicable to EB-5 Regional Center reporting and administrative requirements set by USCIS.
- Assist management with investor reports.
- Outsourced accounting services thru family office division.
- Independent CPA firm reporting.
- Monitoring green card process and tax effects on U.S. transactions to investors and EB-5 project.
- International tax services for investors.
- Documenting lawful source of funds.
- Review of financial pro-forma (budgets and assumption).
Source of Funds and Path of Funds
Seeking classification as an immigrant investor under the employment based fifth preference category, also known as EB-5, carries an evidentiary burden on the investor. An integral part of the submission for conditional residency is that the petition must demonstrate the source and the path of the funds used in the investment structure. This report is referred to as the Source of Funds Report or SOF Report.
The EB-5 regulations require the investor to prove that the invested capital was “obtained through lawful means.” The USCIS (US Citizenship and Immigration Services) requires a detailed report (1) showing how the investor obtained the funds used for the investment and (2) providing a clearly documented “path of funds” from the original source to the commercial enterprise’s bank account.
For example, lawful sources of funds are personal savings, inheritance, a personal loan, a gift, or sale of an asset, etc. There is no single favored source, however whatever the source, it must be fully supported with as much third party documentation as possible. A mere declaration that the funds were lawfully obtained will not suffice.
EB-5 investors’ past income is also a factor used by the USCIS in its evaluation of the EB-5 investor’s conditional residency petition. Income tax records should be submitted for a minimum of five years. In addition to supporting the Source of Funds Report the EB-5 investor’s income tax returns will also assist in proving a “pattern” of income. A “pattern” of income helps support situations where an investor may not have earned a substantial annual income in recent years but accumulated the funds over time.
An equally important part of the documentation process is the path of funds. This means that the flow of funds must be identified, lawful, and documented. The path of funds will demonstrate where the funds originated and how they ultimately arrived in the US investment escrow account. Retaining a certified public accountant, both in the investor’s home country and in the United States, is highly recommended and will ensure full compliance for reporting purposes. Marcum has the resources available to provide this service to investors.
