Applied for sole proprietor EIN while on H-1B

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I am in my 9th year of employment under the H-1B visa, on the green card wait list for some time now and recently have applied for the 3rd renewal term.

Recently, I had a business idea and in my eagerness to do something about it, I applied for the Federal EIN 2 days ago (March 27th) as a sole proprietor, without consulting with an immigration lawyer. I also registered for the Sales and Use tax with the state yesterday (March 28th) and opened a business bank account with the federal EIN. I should note that I did NOT actually start working at the business idea, did not spend any time or effort at the business and have not received any compensation for it.

This is as far as I took the idea until I was made aware last night that my H-1B status prevents me from opening a sole proprietorship (or rather prevents me from working for any other entity other than the H-1B sponsor, and given the nature of sole proprietorship, it is very difficult to dissociate the 'owning' vs 'employed-by' relationship).

At this stage, I do not want to pursue my business idea any further since it may affect my immigration status. I am worried USCIS will see the linkage of my SSN to the EIN and red flags with be raise during the H-1B renewal process and any subsequent processes (green card, citizenship, etc.). Given that I cannot go back in time to undo what I did, I am trying to figure out the best way forward.

What steps should I take at this stage:

  1. Write to IRS to close the EIN, explaining the issue and my ignorance about the non-eligibility?
  2. Write to the state revenue department and un-register the sole propreitorship, explaining the issue?
  3. Write to USCIS and explain the issue and the association with the EIN and try and convince them that I did NOT actually work, hence did not violate any rules and that I took immediate steps (steps 1 and 2) to rectify my error?

Will USCIS accept my reasoning or is it a no-forgiveness situation and my immigration status is threatened now?


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