A reader sent in the following question to me recently in
regards to starting a business while in the United States on a
student visa:
"I'm an exchange student from France who's in the
United States on a F-1 student visa. Because this visa allows me to
work up to 20 hours per week, I was required to obtain an
Individual Taxpayer Identification Number, or ITIN, from the IRS.
I'd like to set up a small business during my stay here to buy
and sell things online. Can I use my ITIN to do this?"
The short answer is "no." According to corporate and
immigration lawyer Gabe Selig of Norwalk, Connecticut, an ITIN
merely helps you comply with federal income tax laws. An ITIN is
issued to people (mostly foreign nationals) who have to pay taxes
or file returns with the IRS but who don't have a Social
Security Number. Here are a few examples:
- An alien who marries a U.S. citizen overseas and comes to the
United States would be issued an ITIN until such time he or she
obtains a "green card."
- A non-resident alien buying real estate in the United States,
such as the European nationals who are currently snapping up condos
in Florida due to the sagging dollar, would be required to get an
ITIN to pay real estate and other taxes here.
- A foreign student who works up to 20 hours per week would be
issued an ITIN in order to obtain a refund of Social Security,
Medicare and other employment taxes that are withheld from their
paychecks but which they're not legally obligated to pay.
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An ITIN can't be used as legal identification nor can it be
used to set up your own business in the United States. For that,
according to Selig, you need either a green card, which entitles
you to remain permanently in the United States and to obtain a
Social Security Number, or one of the temporary visas that allow
you to engage in entrepreneurial activities, such as the E-1 and
E-2 visas.
These type of visas allow you to set up a company and employ
people in the United States, provided you're willing to invest
heavily in the business--generally around $1 million--although if
you're planning to locate in a rural or inner-city area with
higher-than-average unemployment rates, you may only have to invest
$500,000 or so.
The E-1 and E-2 visas generally allow you to stay in the United
States legally for a period of three to five years, and may be
renewed if you can convince the U.S. Bureau of Citizenship and Immigration
Services that the business is doing well and that you intend
eventually to return to your country of origin.
Selig says that to qualify for an E-1 or E-2 visa, you have to
make sure you retain ties with your country of origin. "If
you're from France, for example," Selig says, "the
Bureau will look to see that you continue to have bank accounts,
own real estate or correspond regularly with family members there.
If you have no family, bank accounts or real estate in France,
it's a lot less likely that you intend to return there, and
they'll be less likely to grant you the visa."
Selig also cautions that E-1 and E-2 visas are only issued to
aliens from certain countries--those with whom the United States
has signed treaties allowing for cross-border movement of
entrepreneurs.
What about buying an ownership interest in an existing small
business here in the United States? If the business is structured
as a limited liability company or as a "C" corporation
(not a Subchapter "S" corporation, which can be
owned only by U.S. nationals), resident and non-resident aliens may
become owners as long as the state of incorporation doesn't
prohibit ownership by foreign nationals. Still, unless you apply
for and are granted a green card, you'll still have to return
physically to your home country when your visa term expires, even
though you'll remain an investor in the U.S.-based small
business.
What about just staying here when your current visa term
expires? It's a bad idea to overstay your welcome, even though,
Selig says, "it's very easy to do and about 10 million
people are currently doing it." Unless you marry a U.S.
citizen, he adds, it's almost impossible under current law to
obtain a green card once become an illegal alien.
Whatever you decide to do, stay within the bounds of the law,
and do everything you can to get a green card before your temporary
student visa expires. For information about the Diversity Visa
Lottery Program, under which up to 50,000 green cards are issued
annually on a more-or-less random basis, visit the program's Web page.
Cliff Ennico is a syndicated columnist, author and host of
the PBS television series MoneyHunt. This column is no
substitute for legal, tax or financial advice, which can be
furnished only by a qualified professional licensed in your state.
Copyright 2005 Clifford R. Ennico. Distributed by Creators Syndicate
Inc.