News & Press

September 4th, 2024

Rogers & Brown

Written By: Lori Mullins, Director of Operations at Rogers & Brown

Who is the Importer of Record?

“Importer of Record” is defined as the owner or purchaser of the goods. Importer data is maintained by U.S. Customs using the U.S. EIN# (also often referred to as a tax I.D. #). A foreign company can be a U.S. Importer of Record, but they must provide U.S. Consignee data and the corresponding tax I.D. # for the U.S.-based consignee. Taking on the role of an Importer of Record comes with risk and reward. The ability to source goods worldwide allows an importer to buy at often more reasonable prices and sometimes better quality. However, buying internationally also means there are greater risks and responsibilities.

What does that mean for an Import Transaction?

One of the newest responsibilities of an Importer of Record is to clearly understand your sourcing. As Customs and Border Protection (CBP) cracks down on forced labor, the Importer must also be vigilant to keep forced labor out of their supply chain. The importer must visit the seller, see the manufacturing operations, and set written legal guidelines and rules that the seller must meet. Complete visibility of the sourcing all the way down to the inputs used in manufacturing is a necessity to know your supply chain.

Additionally, the Importer of Record is responsible for the reasonable care standard. This standard requires that the Importer fully knows and provides the correct value, classification, and rate of duty. They must also provide the correct documentation and information that allows CBP to properly assess duties, collect statistics, and determine whether other applicable laws are met. Reasonable Care is a standard defined in the Mod Act. A document from CBP on this standard can be found here.

CBP expects the Importer of Record to be knowledgeable and proactive with their compliance responsibilities, so clearly understanding the Importer’s role is extremely important. The U.S. Importer of Record must maintain copies of the U.S. entry documents for 5 years. CBP audits importers, and importing a product that falls under a priority trade issue increases the chance of an audit. CBP audits are compliance-driven, and CBP will involve data and risk analysis.

Who is the Licensed Customs Broker?

In most cases, the U.S. Customs Broker works in an advisory role. U.S. Customs and Border Protection views the U.S. Customs Broker as the expert in U.S. Customs law. According to CBP:

“Customs brokers are private individuals, partnerships, associations, or corporations licensed, regulated, and empowered by U.S. Customs and Border Protection (CBP) to assist importers and exporters in meeting Federal requirements governing imports and exports. Brokers submit necessary information and appropriate payments to CBP on behalf of their clients and charge them a fee for this service.

Brokers must have expertise in the entry procedures, admissibility requirements, classification, valuation, and the rates of duty and applicable taxes and fees for imported merchandise.

There are approximately 14,454 active licensed Customs brokers in the United States. (CBP)”

Only a licensed Customs Broker or the actual Importer of Record filing entries on their own behalf can transmit entry data electronically through the appropriate software to CBP. An Importer of Record hires the Customs Broker to function as their agent with U.S. Customs & Border Protection and authorizes them to do so via a Power of Attorney signed by an officer of the company. The broker then enters the required shipping documents into the CBP database for transmission to CBP. Upon cargo release from CBP and other agencies, the duty payment is then made, and the cargo is released for final delivery to the Importer or consignee of the goods.

The services of a Customs Broker are similar to those of a CPA. Many businesses hire a CPA to file their taxes for them. The CPA is responsible for filing while also understanding and applying the tax laws, but ultimately, the business or individual is responsible for providing accurate data for the filing. The same applies to Customs Brokers and Importers.

The use of an external expert like a Customs Broker who is experienced and can collaborate with you to develop a compliant import program is a key piece in the puzzle.