HTS Code Re-classification
After 25 years in the Customs Clearance business, we understand the worry and concern that clients are facing as they try to figure how much the increase in tariff on goods from China is going to affect their business.
We have been inundated with calls from importers who are now questioning the HTS code numbers they’ve been importing under. Questions like:
- “Do you think my goods could fall under this HTS?”
- “It’s not really that, it’s this.”
- “ What if we ship out of another country?”
- “How can I avoid this? This will kill our profit!”
In some cases after reviewing their goods, the tariff and explanatory notes, we discovered goods could be classified differently. Or we verified that the HTS codes were correct and additional taxes would now become part of importing from China.
Additional Taxes and Fines
However, even if we figured out that the HTS code could be classified differently; there are additional things to consider. U.S. Customs warns that if an importer decides that the HTS they’ve been using is incorrect, the importer needs to be prepared to go back and correct previous entries, up to 5 years to the correct HTS and pay the appropriate duty. Just changing the HTS and moving forward could be a flag to Customs and likely CF28 and CF29’s issued on previous entries.
As an example, some importers are asking to change their current classification which is at 3% plus the additional 10% tax, to a classification at 5% without the increased China tax. But, by making this change they now owe an additional 2% in taxes on all the past entries for the last five years.
Our goal is to make importers aware of all the different requirements when they are asking about changing HTS codes. Obviously, if the imported goods have been classified incorrectly, they need to be corrected. However, if the goal is to get creative with ways to deal with the additional tariff increases, additional taxes and fines could be the alternative.
Looking for feedback on your HTS code classification? We are happy to help.