Gerald LeMelleBy Gerald LeMelle

LeMelle is a partner at Dunlap Bennett & Ludwig’s Tysons Corner Office.

 

 

 

[Apr. 9, 2020 Tysons Corner]   The Coronavirus Aid, Relief, and Economic Security (CARES) Act is a $2 trillion-dollar economic recovery package that among other relief provides for the issuance of one-time payments, called recovery rebates, to help individuals recover from the economic impacts of the COVID-19 pandemic. Dunlap Bennett & Ludwig has received questions from clients regarding the eligibility requirements for these payments and the impact on public charge inadmissibility determinations for foreign nationals who receive these payments. The American Immigration Lawyers Association and the Congressional Research Institute have provided some guidance and this alert is intended to provide an overview of immigration-related eligibility requirements regarding the recovery rebates and unemployment insurance outlined in the CARES Act.

Who Is Eligible for a Recovery Rebate?

Only individuals with valid Social Security numbers and people who qualify as “resident aliens” as defined by the IRS are eligible to receive the payment. Non-U.S. citizens are considered nonresident aliens unless they meet one of two tests set forth by the IRS: the green card test or the substantial presence test.

Green Card Test: Lawful permanent residents of the United States are considered resident aliens if they were lawful permanent residents at any time during the calendar year. This is known as the “green card” test. Lawful permanent residents continue to have U.S. resident status under this test unless they voluntarily renounce and abandon their status in writing to the USCIS, their immigrant status is administratively terminated by the USCIS, or their immigrant status is judicially terminated by a U.S. federal court.

Substantial Presence Test: A foreign national is considered a “resident alien” if he or she meets the substantial presence test for the calendar year. To meet this test, an individual must have been physically present in the United States for a designated minimum threshold period outlined by the IRS. Note that the IRS exempts certain nonimmigrant visa statuses from the physical presence calculation, such as individuals temporarily present in the U.S. under an F, J, M, or Q visa. Most work-authorized immigration statuses, such as H-1B, L-1, O-1, and TN, are not exempted and may be able to meet the substantial presence test.

Importantly, those who file their taxes using an Individual Taxpayer Identification Number (ITIN) are not eligible for a recovery rebate. Moreover, the CARES Act denies the rebate to an eligible individual with a Social Security number if the individual filed a joint return with a spouse who has an ITIN, or filed a return with a qualifying child who has an ITIN. There is a limited exception for adopted children and military families. From a practical standpoint, this will mean that many H-1B and other work-authorized nonimmigrants will not be eligible for a recovery rebate if they filed a joint income tax return with a spouse who is not eligible for, and thus does not have, a social security number. An H-1B worker whose H-4 spouse is not eligible for a social security number, for instance, and who filed a joint income tax return with his or her H-4 spouse, will not be eligible for a recovery rebate.

Will Receiving a Recovery Rebate Impact My Client’s Immigration Application under the Public Charge Rule?

An alien’s receipt of the recovery rebate or unemployment compensation is not to be factored into determinations made under the new Department of Homeland Security (DHS) public charge rule about whether the alien is ineligible for LPR status due to likely future dependence on public benefits. That’s because neither type of benefit appears in the exclusive list of benefit types that count as “public benefits” under the rule. In the preamble to the rule, DHS explained that it considers unemployment compensation an “earned benefit” not appropriate for public charge consideration. DHS also explained its decision not to consider other types of tax credits under the rule, such as the Earned Income Tax Credit and the Child Tax Credit: “DHS is not including tax credits because many people with moderate incomes and high incomes are eligible for these tax credits, and the tax system is structured in such a way as to encourage taxpayers to claim and maximize all tax credits for which they are eligible.”

Unemployment Insurance

The CARES ACT does not make clarify immigration-related eligibility requirements for federally funded UI benefits. Under the baseline requirements established in the Federal Unemployment Tax Act (FUTA), aliens typically qualify for regular UI benefits if they are authorized to work (both at the time they perform qualifying work and when they apply for and receive benefits). Regular UI benefits are funded by state taxes. But the CARES Act establishes, among other provisions, federal funding for three major UI programs (Pandemic Unemployment Assistance, additional weeks of benefits, and additional $600 in federal weekly compensation), as explained further in another CRS product. Such federal funding may trigger the restriction in 8 U.S.C. § 1611, a provision of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA), which limits eligibility for “federal public benefits” to “qualified aliens”—a restrictive term that only covers certain groups enumerated in the statute, such as LPRs, asylees, and refugees. If this restriction applies to the CARES Act programs, some categories of aliens who have work authorization and are generally eligible for regular UI benefits would not qualify for them. Examples include DACA recipients, TPS holders, and many applicants for asylum.

Many holders of nonimmigrant work visas, such as H-1B visas for specialty occupations and L visas for intracompany transferees, face a unique bar to eligibility for unemployment benefits. If PRWORA applies to benefits under the CARES Act, such nonimmigrants would not be eligible because they are not “qualified aliens.” But even under the baseline work-authorization requirement for regular UI under FUTA, many nonimmigrant workers do not qualify under the case law in some states because they’re not considered “able and available to work” when they are unemployed. The terms of their visas authorize many nonimmigrant workers to work only for a single employer. Losing a job with that employer, therefore, means losing their work authorization, under the analysis of some state cases. Even though H-1B and some other nonimmigrant workers have the flexibility to change employers, federal law requires the new employer to file a new visa petition before the employee may work (and for some visa categories, the petition must be approved first). If a nonimmigrant worker has lost a job and does not have a new visa petition filed by a new employer, the worker is not “able and available” to work and does not qualify for benefits.

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