I-140 Ability to Pay: How Employers Prove It and Why It Fails

For every employer-sponsored EB-2 petition, there is a non-negotiable requirement that trips up startups, smaller businesses, and even established companies with inconsistent financials: the I-140 ability to pay.

USCIS requires the sponsoring employer to demonstrate that they have the financial capacity to pay the proffered wage — the salary listed in the PERM labor certification — starting from the priority date (when the PERM was accepted by the DOL) and continuing until the beneficiary obtains permanent residence. This is not a one-time snapshot. It is a continuing obligation that covers potentially years of the green card process.

What "Ability to Pay" Actually Means

By regulation (8 CFR §204.5(g)(2)), ability to pay must be established through specific financial metrics derived from the employer's most recent annual report, federal income tax return, or audited financial statement. USCIS officers are instructed by the "Yates Memo" to pull specific figures from specific lines on specific tax forms.

USCIS evaluates ability to pay through one of three methods:

1. Net income. If the company's net income for the most recent tax year equals or exceeds the proffered wage, ability to pay is established.

2. Net current assets. If net current assets (current assets minus current liabilities, from Schedule L of the corporate return) equals or exceeds the proffered wage, ability to pay is established.

3. Paying the beneficiary. If the employer is already employing the beneficiary and paying them a salary equal to or greater than the proffered wage, ability to pay is automatically established. Submitting the beneficiary's W-2 forms for the relevant years satisfies this requirement cleanly.

One critical rule that trips up many employers: USCIS will not combine partial net income and partial net current assets to meet the threshold. One of the two metrics must independently satisfy the requirement. If neither net income nor net current assets alone equals the proffered wage, the employer cannot average them or add them together.

Where Ability to Pay Is Pulled From on Tax Returns

The specific tax return lines USCIS references depend on corporate structure:

For net current assets, USCIS looks to Schedule L of the corporate tax return (Balance Sheet) — current assets minus current liabilities.

Startups and early-stage companies filing losses on their returns frequently fail this analysis. A company reporting a $2 million operating loss in pursuit of growth may have substantial venture capital funding, a strong balance sheet in cash terms, and every intention of paying the proffered wage — but USCIS's approach is narrow. Taxable income (net income per the return) is what they use, not cash position, runway, or investor commitments.

When Ability to Pay Is Evaluated

USCIS evaluates ability to pay as of the priority date — which, for PERM cases, is the date the DOL accepted the PERM application. This can create a gap: the PERM process takes 22 to 26 months, so by the time the I-140 is filed, USCIS may be looking at tax returns from years earlier.

USCIS evaluates the most recently filed tax return at the time of I-140 adjudication, but considers whether the employer had ability to pay from the priority date forward. If the earliest relevant tax return does not support the proffered wage, an RFE will be issued requesting financial documentation for the period back to the priority date.

Common Scenarios That Cause Ability to Pay Problems

Early-stage startups with operating losses. A company burning cash to fuel growth has negative net income. Even a $30 million company with strong VC backing may show losses on its returns. USCIS's ability to pay analysis does not account for cash on hand, funding rounds, or investor commitments.

Companies that lost revenue in a specific year. Economic downturns, one-time losses, or restructuring can produce a year with negative net income. If that year falls in the critical window, an RFE is likely.

Companies with over 100 employees. USCIS may require audited financial statements from larger employers rather than simply accepting the tax return. This adds complexity and cost.

Sole proprietorships and small businesses. Schedule C net profit is often very low after legitimate business deductions, even when the owner's personal income is substantial. Demonstrating ability to pay for a sole proprietor is genuinely difficult if the Schedule C shows low profit.

How to Respond to an Ability to Pay RFE

If USCIS issues an ability to pay RFE, the response options include:

• Submitting W-2 and payroll records showing the beneficiary is already employed and paid at or above the proffered wage (the cleanest solution if applicable)
• Submitting audited financial statements or accountant-prepared statements that show net current assets sufficient to cover the proffered wage, even if the tax return shows a loss
• Submitting a letter from the company's CFO or financial officer explaining the company's financial position for larger companies
• Demonstrating net current assets through the balance sheet even if net income is insufficient

What This Means for Employees

If you are sponsored by a startup or a company with volatile financials, the ability to pay requirement creates real risk. An employer can invest years and significant money in the PERM process, secure a certified PERM, file the I-140 — and have the I-140 denied because the tax returns from the priority date period do not show sufficient net income or net current assets.

By the time the denial arrives, you may have been waiting 2 to 3 years. The PERM needs to restart with a new employer. The priority date from the withdrawn I-140 is only protected if the petition was approved for at least 180 days before withdrawal — a denied I-140 does not have an approval period.

Understanding your employer's financial situation before PERM is filed is not unreasonable due diligence. Asking HR or immigration counsel whether the company has reviewed its ability to pay in the context of the proffered wage is a legitimate question with significant consequences for your case.

The US EB-2 Employment-Based Green Card Guide includes an ability to pay calculation worksheet — walking through how to extract the relevant figures from common tax return structures, how to assess your employer's risk profile, and what to do if you discover a potential problem early.