Fat Cat H1-B Employers Get Huge USCIS Refunds – Would-Be Citizens Do Not

By David North, April 15, 2014

A low-income alien, wanting to become a citizen, has to scrape up $680 for his naturalization fees. Then he fails the test, twice.

Meanwhile, at the other end of the economic power spectrum, a major fat-cat user of the controversial H-1B program, in order to increase his profits, has applied for more new H-1Bs (at $4,325 apiece) than he can obtain, because of the ceiling on the program. His efforts have failed, in part, too.

So what happens to the poor man's $680? The government keeps it.

What happens to the corporation's fees for those non-approved petitions? The company gets all its money back!

In one case, we estimate that the single largest user of indentured H-1B workers is about to get $32,000,000 in the mail, for applying for more H-1Bs than it can realistically expect to receive.

And all this comes from an administration that says it wants to reduce the huge gap between the very rich and the rest of us.

The above may be hard to believe, but it is true.

Naturalization. Let's start with the would-be citizen. While most applicants are granted citizenship, and while the testing standards are pretty mild, the Department of Homeland Security is clear on what happens to the fees in cases of failure. One of its documents (Form M-479 (Rev. 03/10/14)N) states:

Remember that your application fee is not refundable even if you withdraw your application or if your case is denied.

Similarly, if the alien wants to apply again, he has to pay a new $680 fee. (He gets two chances to pass the test for his money.)

Bear in mind that the would-be citizen – a legal immigrant, by definition – wants to join our society, and that we want qualified aliens to do so. Further, the alien is not operating on the profit motive; he is unlikely to make more money simply by becoming a citizen.

H-1B Program. Now, in contrast, we have the not-so-sad plight of the big corporation, seeking higher profits, that wants to hire (relatively) skilled workers from overseas at what most agree are below-market rates. The workers, in addition to being relatively inexpensive, are docile and hardworking, and are in a nearly indentured status, because they want their employer to keep them in H-1B status for a while and then sign the papers that will bring them green cards.

As we reported earlier, there were more than twice as many applications in the last round of H-1B hiring than the 85,000 ceiling or cap allowed. There is a strong possibility that corporations filed more applications than they wanted in order to game the system.

One reason for not following that course would be a governmental rule that if the application were not accepted (as in the case of our would-be citizen) the government would keep the fee. But that is not the case, as this recent USCIS press release indicates:

For cap-subject petitions not randomly selected, USCIS will reject and return the petition with filing fees...

The decision to return the money in these corporate cases is, I am told by my colleague John Miano, was made by the agency, and not by Congress.

How does the decision play out with the big users of the H-1B program? Let's simply take the case of the biggest and most controversial of the H-1B users, Infosys.

This outsourcing corporation, frequently sued for mistreating its workers, both aliens and citizens, had about 8.5 percent of the Labor Condition Applications (LCAs) filed with the U.S. Labor Department in fiscal year 2014, according to the MyVisaJobs.com site. LCAs, in turn, are forerunners of H-1B applications filed with DHS.

Using the 8.5 percent, and applying it to the 87,500 over-applications (beyond the 85,000 cap) filed with DHS, we estimate that about 7,440 of the excess filings belonged to Infosys.

Given that heavy users of the H-1B program ("H-1B dependent employers"), such as this firm, must pay filing fees of $4,325 each, that would suggest that Infosys would be getting a refund of about $32,178,000 this year from DHS.

Assuming that most applications, but not all, were filed by similar employers (i.e., the Indian body shops) this would produce a total refund of a whopping one-third of a billion dollars, sent from USCIS to the H-1B employers. (The H-1B dependent firms pay $2,000 more than other firms for the H-1B fees.)

To be consistent, USCIS should also send $40 million or so a year to the unsuccessful naturalization applicants, but it does not do so.