Infosys was recently alleged to have illegally utilized B-1 visas instead of H-1Bs and to have illegally withheld requisite U.S. taxes.
However, Infosys’ actions re: the non-payment of federal or state income taxes, and the use of B-1 visas instead of H-1Bs could be justified: see Foreign Affairs Manual notes at 9 FAM 41.31 N11, N11.1 9 FAM 41.31 N11, N11.1 regarding B-1 visa use in leiu of H-1Bs. If a B-1 worker and the position qualify under the enumerated provisions, they are not to be paid a salary in the US, instead, they are to be paid in overseas funds by the Infosys India. Therefore it may be that Infosys cannot legally pay the taxes which are at the heart of the controversy. As for the use of B-1 visas instead of H-1Bs, it is allowable under certain circumstances which are not elaborated upon in the linked story.
Per 9 FAM 41.31 N11, “ALIENS NORMALLY CLASSIFIABLE H-1 OR H-3”,
“There are cases in which aliens who qualify for H-1 or H-3 visas may more appropriately be classified as B-1 visa applicants in certain circumstances; e.g., a qualified H-1 or H-3 visa applicant coming to the United States to perform H-1 services or to participate in a training program. In such a case, the applicant must not receive any salary or other remuneration from a U.S. source other than an expense allowance or other reimbursement for expenses incidental to the alien’s temporary stay. For purposes of this Note, it is essential that the remuneration or source of income for services performed in the United States continue to be provided by the business entity located abroad, and that the alien meets the following criteria:
(1) With regard to foreign-sourced remuneration for services performed by aliens admitted under the provisions of INA 101(a)(15)(B), the Department has maintained that where a U.S. business enterprise or entity has a separate business enterprise abroad, the salary paid by such foreign entity shall not be considered as coming from a “U.S. source;”
(2) In order for an employer to be considered a “foreign firm” the entity must have an office abroad and its payroll must be disbursed
abroad. To qualify for a B-1 visa, the employee must customarily
be employed by the foreign firm, the employing entity must pay the employee’s salary, and the source of the employee’s salary must be
abroad…”
Also, 9 FAM 41.31 N11.1 “Incidental Expenses or Remuneration” indicates,
“A nonimmigrant in B-1 status may not receive a salary from a U.S. source for services rendered in connection with his or her activities in the United States. A U.S. source, however, may provide the alien with an expense allowance or reimbursement for expenses incidental to the temporary stay.
Incidental expenses may not exceed the actual reasonable expenses the alien will incur in traveling to and from the event, together with living expenses the alien reasonably can be expected to incur for meals, lodging, laundry, and other basic services.”
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The U.S. Immigration Law Blog by Ashwin Sharma 
Alleged large-scale visa fraud at Infosys could actually be legal
Infosys was recently alleged to have illegally utilized B-1 visas instead of H-1Bs and to have illegally withheld requisite U.S. taxes.
However, Infosys’ actions re: the non-payment of federal or state income taxes, and the use of B-1 visas instead of H-1Bs could be justified: see Foreign Affairs Manual notes at 9 FAM 41.31 N11, N11.1 9 FAM 41.31 N11, N11.1 regarding B-1 visa use in leiu of H-1Bs. If a B-1 worker and the position qualify under the enumerated provisions, they are not to be paid a salary in the US, instead, they are to be paid in overseas funds by the Infosys India. Therefore it may be that Infosys cannot legally pay the taxes which are at the heart of the controversy. As for the use of B-1 visas instead of H-1Bs, it is allowable under certain circumstances which are not elaborated upon in the linked story.
Per 9 FAM 41.31 N11, “ALIENS NORMALLY CLASSIFIABLE H-1 OR H-3”,
“There are cases in which aliens who qualify for H-1 or H-3 visas may more appropriately be classified as B-1 visa applicants in certain circumstances; e.g., a qualified H-1 or H-3 visa applicant coming to the United States to perform H-1 services or to participate in a training program. In such a case, the applicant must not receive any salary or other remuneration from a U.S. source other than an expense allowance or other reimbursement for expenses incidental to the alien’s temporary stay. For purposes of this Note, it is essential that the remuneration or source of income for services performed in the United States continue to be provided by the business entity located abroad, and that the alien meets the following criteria:
(1) With regard to foreign-sourced remuneration for services performed by aliens admitted under the provisions of INA 101(a)(15)(B), the Department has maintained that where a U.S. business enterprise or entity has a separate business enterprise abroad, the salary paid by such foreign entity shall not be considered as coming from a “U.S. source;”
(2) In order for an employer to be considered a “foreign firm” the entity must have an office abroad and its payroll must be disbursed
abroad. To qualify for a B-1 visa, the employee must customarily
be employed by the foreign firm, the employing entity must pay the employee’s salary, and the source of the employee’s salary must be
abroad…”
Also, 9 FAM 41.31 N11.1 “Incidental Expenses or Remuneration” indicates,
“A nonimmigrant in B-1 status may not receive a salary from a U.S. source for services rendered in connection with his or her activities in the United States. A U.S. source, however, may provide the alien with an expense allowance or reimbursement for expenses incidental to the temporary stay.
Incidental expenses may not exceed the actual reasonable expenses the alien will incur in traveling to and from the event, together with living expenses the alien reasonably can be expected to incur for meals, lodging, laundry, and other basic services.”
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