What is Unauthorized Employment?
It is not necessary that one work for an existing business as an employee in order to be engaged in unauthorized employment. When an individual establishes a business, even on a part-time basis from home, s/he is considered to be working in the United States. Thus, if s/he is present in a status that does not allow employment or that only permits employment with a specific sponsoring
employer, such an individual is engaging in unauthorized self-employment. This is also the case even if the involvement is fairly passive, such as in some internet-based businesses and certain multi-level marketing operations. Therefore, while there is often a temptation to earn extra money, and many spouses in non-work authorized statuses would like to be able to contribute financially to their households, it is not permissible under these circumstances.
It can be difficult to define the precise line between an acceptable money-generating activity and employment. For example, people often sell off old, unwanted belongings. Selling items that one acquires routinely in life is generally not considered as unauthorized employment. There are often state or local laws regarding how often one can have a yard sale or sell items at a flea market and you should contact a local attorney or tax professional to discuss this matter. However, a line is crossed when one starts to acquire such items for the purpose of reselling. This same analysis can be applied in various income-generating technology areas. We have received a variety of questions related to technology, specifically pertaining to payments based on "views" of social media creations or traffic to a website. Other questions surround the creation of certain apps. There is a line between creating apps or web content as a hobby and doing it for the purpose of income generation. While it can be hard to define the limits, when one exceeds those limits, immigration problems can be created due to unauthorized employment. Thus, it is best to be very cautious in this area.
Incorporation Not Required
When speaking in terms of having one's own business or being self-employed, it is not necessary to have formed a corporation or LLC or a partnership. Even if no legal business entity is created, there can be self-employment without authorization.
When the Problems Arise
The problems in situations such as those described above usually arise at the U.S. consulates in connection with visa applications or applications to adjust status to permanent residence (Form I-485). These are instances in which it is sometimes necessary to provide income tax returns. If these returns show income from unauthorized employment, the U.S. consulate could deny the nonimmigrant visa and the U.S. Citizenship and Immigration Services (USCIS) could deny the I-485 for working without authorization. To obtain a visa at the consulate, the consular officer must be convinced that the applicant will comply with the terms of the requested visa. If the officer sees a history of past violations in the form of unauthorized employment, the visa may be denied. It is also necessary in both contexts to provide employment history, under penalty of perjury. These matters, therefore, sometimes come to light when an individual realizes that s/he has engaged in self-employment and that the immigration filings must include this.
In order to adjust status, it generally is necessary to be in status at the time of filing. (There are exceptions under Section 245(k) for employment-based cases, when 180 days of violation can be disregarded, and under Section 245(i) for qualifying cases filed prior to April 30, 2001.) Violating status by working without authorization can result in denial of an application to adjust status to permanent residence or "green card" status (I-485).
While problems are generally detected in the tax filings, this does not mean that there is no violation as long as a paycheck is not received. The failure to declare money and pay taxes on any money earned in order to avoid detection is not a solution. Deliberate failure to pay taxes on money earned is a criminal violation that can trigger even more serious immigration consequences.
Passive Investments Allowed
The above information is not to be confused with making passive investments. It is permissible to make financial investments that, hopefully, will generate financial gain, provided that the investments are entirely passive in nature. For example, it is permissible to invest in various savings vehicles, such as the stock market or bonds, where the only involvement in obtaining the financial gain is purely passive and not the result of working (other than planning and research). It would be possible to invest in a private company, as long as the only role of the individual is as a passive investor.
If an individual has been involved in a business s/he owns, it would be best to seek the advice of an experienced immigration attorney. There may be a solution that will place the individual back into lawful status. One then needs to comply with the terms of her/his status, including ceasing the unauthorized employment. Timing can be important in crafting a solution, since working beyond 180 days could pose a serious problem in most employment-based cases.
Immigration laws are complex. Violations, even made innocently, often result in harsh consequences for individuals and their families. When in doubt regarding an immigration matter, it is important to obtain proper advice. The problem discussed here usually occurs because one either makes wrong assumptions or obtains advice from friends and colleagues, who are not qualified to advise based on all the facts of the case. While insights and recommendations from friends and colleagues can be helpful at times, final decisions on important legal matters need to be made based on experienced, knowledgeable legal advice.