U.S. Customs seeks solid data on companies that receive imported goods
Customs brokers are warning that new U.S. Customs regulations designed to help security efforts by collecting information on the receiver of a shipment and low-value shipments are likely to increase delays and costs for imported goods when they go into effect Oct. 1.
On that date, U.S. Customs and Border Protection will require importers or their designated agents to supply the Internal Revenue Service tax number (or Social Security number for individuals), of the ultimate consignee in the United States. The move is part of a wide-ranging CBP effort to crack down on accurate reporting of import details to help agents analyze commercial trade data for shipments with potential ties to criminal or terrorist activity. Currently, it is sufficient for brokers and importers to transmit the name and address of the consignee if the federal tax ID number is not available.
Brokers face a significant increase in their workload to research the ID number for each consignee. Customs will not clear shipments until the broker obtains the ID number. CBP may even order cargo exported back to the country of origin if the tax number is missing from the entry form.
Complicating the effort is the fact that American companies are often reluctant to give out their tax number to a broker with whom they have no business relationship since the broker’s client is the foreign shipper. Individuals typically are reluctant to give out sensitive, personal information as well. And shippers or brokers will have to furnish the tax ID number for each U.S. buyer receiving a piece of a consolidated shipment.
The National Customs Brokers and Forwarders Association of America, the Northern Border Brokers Association and other trade groups have asked CBP to provide the international merchant community with form letters that brokers can send to ultimate consignees explaining the Customs requirements and that the broker is required to keep the tax ID and Social Security information confidential, Arthur Litman, a vice president for FedEx Trade Networks, reminded CBP officials attending the recent meeting of the Advisory Committee on Commercial Operations (COAC).
An exception for certain shipments valued at less than $2,000 and eligible for informal entry will allow brokers to supply CBP with the ultimate consignees’ names and address when the federal ID numbers are not known, according to a customer bulletin from FedEx Trade Networks. The FedEx brokerage outfit recommends that shippers still provide the federal tax ID number in these cases because CBP will not allow such entries to be processed electronically, which can slow cargo release and increase costs.
Brokers are urging importers to get the tax information in advance from their U.S. buyers and include it on their customs forms.
Meanwhile, some still question how useful the IRS number is in providing Customs with the targeting data it seeks.
“If you are putting us through this new exercise, make sure it is valuable information before you enforce it,” Litman said. He suggested the final delivery address might be more meaningful for finding out the ultimate user than an address associated with a number.
Confusion still exists among the import/export community about CBP’s exact definition of the ultimate consignee under various situations. Customs defines the consignee at the time of entry or release as the party to whom the foreign shipper sold the imported merchandise, but the legal importer of record may not be ultimate recipient. Many shipments also consist of consolidated entries going to multiple consignees.
Betsy Durant, CBP director of trade compliance and facilitation, promised her office would try to clarify those definitions for companies engaged in foreign trade.
Oct. 1 is also the date CBP will change its long-standing practice of not having to report line by line on the Customs entry form each shipment valued at under $2,000 in value. The practice was changed more than a decade ago to speed Customs processing along the northern border. Under the new policy, importers must report all shipments of merchandise regardless of value in order to secure the release of their goods. The change is expected to increase workloads for brokers who will have to enter all the extra data.