Importers know that there are certain requirements that cannot be overlooked when importing goods and merchandise into the United States. New importers frequently get confused with these requirements since there are many sections of information to cover. Among all the requirements, a few of the most crucial requirements include the right to make entry, securing the importer security filing, and getting a customs bond. Missing just one of these will give importers a difficult time with Customs.
This article, though not an exhaustive list, will be a useful guide for the three vital requirements.
Right to Make Entry
For merchandise to enter and clear with Customs and Border Protection, the importer of record should have the legal right to make the necessary filings, this is known as having the Right to Make Entry.
The importer of record may be any of the following:
- the owner of the merchandise,
- the purchaser of the merchandise, or
- when designated, a licensed Customs Broker with an active Power of Attorney (POA).
When a Customs Broker gains a right to make entry, they do so by having a CBP Power of Attorney issued. The POA is granted by the person or company for which the Customs Broker is acting as an agent and authorizes the broker to file information or conduct Customs Business on behalf of the importer.
Do note that POAs are valid until revoked or 2 years for partnerships. POAs from corporations must be executed by a person duly authorized to do so, such as a Corporate Officer.
In most of the cases, the entry is made by a person or firm certified by the carrier bringing the goods to the port of entry. The certified entity, in this case, is considered the “owner” of the goods for Customs purposes. According to United States tariff laws, Customs Brokers are the only entities authorized to act as agents of the importer.
Importer Security Filing (ISF)
Importer Security Filing, also known as 10+2, is a US Customs and Border Protection (CBP) regulation requiring importers and vessel carriers to provide data electronically to CBP for U.S.-bound ocean cargo (an exception is made if goods come from Canada). The ISF helps Customs recognize high-risk cargo arriving into the United States that will need further inspections and will not be able to move without further checks.
The ISF must be completed 24 hours before goods are loaded onto an ocean vessel. CBP may issue monetary fines of up to $5,000 per violation for the submission of an inaccurate, incomplete or untimely filing.
Customs bonds are financial guarantees entered between 3 parties: The Insurance/Surety company issuing the Customs bond, the Principal (who is required to file the bond), and Customs & Border Protection (CBP).
The Customs bond protects Customs and Border Protection in the scenario where they cannot collect monies due from the Principal. It allows them to seek remedy, up to the bond amount, from the Insurance/Surety Company.
The Customs bond also indemnifies the Insurance / Surety Company, allowing them to use any legal means to collect from the Principal any monies that were paid to CBP on the Principal’s behalf.
Importers have the option of obtaining a “single entry” or “continuous bond”. The type of bond elected to obtain ultimately depends on how often import is done into the U.S. or the value of the goods they are bringing in.
For instance, if imports are only done on occasion, the single-entry bond is recommended. As a general guideline, bonds are calculated at Value of Merchandise plus duties/taxes or 3 times of the Value of Merchandise for restricted merchandise.
If you import frequently and through various ports of entry, the continuous bond is beneficial and economically the best choice. This type of bond is valid for 12 months and calculation of bond value is 10% of duties/taxes with a minimum of $50,000.
After securing the right to make entry, the ISF, and customs bonds, Customs will assign liquidation dates and automatically process liquidation. Liquidation involves the final tally of money owed to Customs based on current knowledge of duty rates and the value of the imported goods.
During liquidation, CBP assesses if the importer’s estimated amount due upon entry was correct. If CBP finds that a higher amount is owed than the amount paid, a supplemental duty bill will be issued for the amount still owed. If a lower amount was due, CBP will refund the difference back to the importer.
Liquidations typically occur within 314 days of the day it was imported into the US. If the entry has not been suspended or extended by Customs, then the entry will automatically be liquidated using the estimated rates given upon the entry of the goods.
After the liquidation of an entry, it is considered complete according to Customs unless supplemental duties are owed. Customs then exhausts all legal interest, unless criminal activity or fraud is found. However, if an importer disagrees with CBP in their ruling on the entry, they can protest.
When importing goods and merchandise to the US, the processes outlined above should be top of mind. It would be useful to talk to a broker at Gallagher Transport to ensure a smooth import of your merchandise.