Why Do I Need an IRS Number When Importing Into the U.S.?


 

{This post was last updated on March 22, 2016}

You’ve made your sale, you’ve shipped the goods, and the shipment is on its way to the border. Suddenly, the goods are stuck and your customs broker is requesting an IRS number. What is it and why is it required?

Goods entering the United States from overseas are considered importations and must be cleared by Customs and Border Protection (CBP). U.S. Customs requires that the Ultimate Consignee (importer) be reported on all importations entering into the United States in the form of an IRS number.  An Ultimate Consignee is the person, party, or designee that is located in the U.S. and actually receives the export shipment.

 

Internal Revenue Services Tax Number (IRS)

An Internal Revenue Service (IRS) number, also known as an Employer Identification Number (EIN) or a Social Security Number (SSN). U.S. Customs states, “The appropriate Ultimate Consignee identification number for U.S.-based Ultimate Consignees is defined as either an Internal Revenue Service Employer Identification Number (EIN) or a Social Security Number (SSN). If the appropriate Ultimate Consignee identification number is not provided at the time of entry or release, entry of the merchandise shall be denied.”  (Source: CUSTOMS DIRECTIVE NO. 3550-079A )

The Ultimate Consignee ID number is the Internal Revenue Service Employer Identification Number (EIN) issued to most business entities whereas the Social Security Number (SSN) is issued to individuals.

How do you know which IRS number you need to provide?

The Internal Revenue Service Employer Identification Number (EIN) is issued to most business entities whereas the Social Security Number (SSN) is issued to individuals.  The customs broker submits this information along with the entry to U.S. Customs.

 

Why is your customs broker asking for the Customs Form 5106?

If you run into this scenario, it is because the Ultimate Consignee is not on file with U.S. Customs. This could be because they have never purchased goods from a foreign party and have therefore never been added to the U.S. Customs database, or it has been more than a year since they last received imported merchandise so their record has been deactivated. If the IRS number is not on file or has been deactivated by U.S. Customs, then it will need to be added into their database. This is done by filing the Customs Form 5106.

What is a Customs Form 5106?

A Customs Form 5106 is used by U.S. Customs to input the name, physical address, and tax identification number of the Ultimate Consignee into their database.  The Customs Form 5106 must be on file for all consignees when an entry for merchandise is being made.

 

Will you have to file a 5106 for every shipment you send to the U.S.?

U.S. Customs states that, “An importer identification number shall remain on file until 1 year from the date on which it is last used on Customs Form 7501 or request for services.” This means that as long as the Ultimate Consignee continues to receive goods on a regular basis, this form will only have to be completed once.  If their 5106 importer record is not used for over a year then they will have to reactivate their number.

Do you need different IRS numbers for different goods or a unique number for each buyer and import different goods under one number?

The IRS/EIN number or SSN number is specific to the buyer as the IRS issues these numbers directly to the company or individual. For importing purposes you would need to provide the IRS/EIN or SSN number for the buyer for your US Customs declaration. So, if someone buys a host of products from you, you would declare the IRS number for the buyer. If you have more than one buyer then it is best to make a declaration per transaction and declare the IRS number for each buyer in each transaction.

 

How do you make sure your customer in the U.S. has a 5106 on file?

As the importer, it is important to have a solid team behind you. Part of that solid team is an experienced customs broker. Being proactive is key. As soon as you take an order from your U.S. customer, it is a good idea to contact your customs broker to iron out the details.  Your customs broker can query the Ultimate Consignee information with U.S. Customs and advise you if they have an active 5106 on file.  If a 5106 is not on file,  your customs broker can supply you with the Customs Form 5106 to be filled out by your client and it will be added to the CBP database so that your goods do not get stuck at the border.

 

 

If you are importing or exporting goods into the USA, Pacific Customs Brokers can help. We work with all types of importers from a broad range of industries offering U.S. and Canadian customs brokerage, trade compliance consulting, freight forwarding, warehousing and distribution services.

Learn more about importing into the USA:

Get a comprehensive understanding of the process involved when importing into the USA at our upcoming webinar U.S. Importing for Beginners [Part 1]. Take your learning a step further by attending the U.S. Importing for Beginners [Part 2] webinar and delve into the details previously touched upon in part one of the series.

Our in-house seminar on U.S. Trade Compliance is another great way to understand the movement, compliance and regulations around goods imported into the USA.

 

Have questions or comments regarding importing to the USA? Leave them in our comments section below or email  Ask Your Broker.

 

 

 
 

Biennial FDA Food Facility Re-registration Opens October 1, 2016


FoodAbout the Food Safety Modernization Act (FSMA) program:

The Food Safety Modernization Act (FSMA) improves the registration process by ensuring, among other things, that the FDA has accurate contact information for each facility. The new registration form also includes new categories of foods. These new categories will help FDA rapidly communicate with the right facilities in the event of an emergency.

Food producers and manufacturers have long been required to register with the Food and Drug Administration. Facilities can register online, via mail or fax. If your company is not domestic (not located within the U.S.) you will be required to assign a U.S. agent in your registration. See below for more information on assigning a U.S. agent.

Read more in our blog: Food Modernization Safety Act – Re-Registering your Facility with the FDA

The U.S. Food and Drug Administration (FDA) issued further information and guidance regarding registration requirements for domestic and foreign manufacturers, processors, packers or holders of food for human or animal consumption based on changes made by the FDA Food Safety Modernization Act (FSMA) to the Federal Food, Drug, and Cosmetic Act (FD&C Act).

Biennial registration renewal for food facilities begins at 12:01 AM on October 1, 2016. The updated food facility registration system is accepting food facility registration renewals.

Who must register?

Under the Food Safety Modernization Act (FMSA), all domestic and foreign facilities that manufacture, pack or store food, food ingredients, pet foods or dietary supplements are required to renew their registration with the FDA before the end of 2016 and to re-register every two years thereafter. This represents a change from the previous registration requirement for food facilities. The re-registration form contains new food categories, and requires more detailed and updated contact information.

 Read more in our blog: U.S. Food Safety Modernization Act – Does It Affect Me?

How to re-register a domestic company?

To submit a registration renewal to FDA, a food facility is required to submit required registration information to FDA, including the additional registration information.

If you are affected by the new regulations, you may re-register your food facility online.

How to re-register if not a domestic company?

Pacific Customs Brokers offers the following services:

  • Act as your U.S. Agent
  • Assist with FSMA re-registration
  • Answer your queries regarding FDA requirements

Contact Pacific Customs Brokers for assistance with food facility registrations or the FSMA. To stay current on this topic, you may also want to subscribe to Pacific Customs Brokers weekly trade newsletter.

Do you have questions on the FDA food facility re-registration? Share them in our comments section below or email Ask Your Broker today.

 
 

In-Bond Trailer and Container Sealing Requirements


 

container-forklift-600Carriers who move goods in-bond from the First Port of Arrival (FPOA) into Canada may need to seal the trailer and/or containers as required by Canada Border Services Agency (CBSA).

Shipment sealing is required for:

  • Carriers who are participating in a CBSA Trusted Trader Program
  • Cargo that is controlled or regulated by an Act of Parliament
  • Cargo moving in-transit
  • Conveyance and containers moving from FPOA to a CBSA examination location as directed by CBSA.

Some exemptions apply to these sealing requirements when customs is overseeing the movement.

These exemptions include:

  • Inland Inspection
    Customs Self Assessment (CSA) carriers may move in-bond goods without a seal except in cases when CBSA requires an inland inspection. In this case CBSA would affix a seal on the load at the FPOA for transport to the examination warehouse. The load must then be delivered to the release point and/or examination warehouse designated by CBSA with the seals intact. If company seals are already affixed CBSA will accept those seals and notate them.
  • High Risk Convoy
    CBSA may permit a load to move in-bond to a destination under the convoy of a Border Services Officer (BSO), where the nature or type of vehicle is considered high risk. In this case the carrier will be expensed for the time and labour of the BSO to convoy and examine the shipment.

Tips:

  1. Ensure the seal remains intact
    This company seal must remain intact unless CBSA performs an examination at the FPOA. If the seal did not remain sealed and/or the seal was broken without CBSA approval, penalties may incurred.
  2. eManifest requirements
    When a company places a seal on a trailer, vehicle or container that contains in-bond goods, the seal number must be noted correctly on the pre-arrival conveyance transmission.

Please note, CBSA has the right to seal any conveyance, container or compartment at any time.

Have a question regarding in-bond trailer or container sealing requirements? Share them in the comments section below or email Ask Your Broker.

 
 

Estimated vs. Actual Duty Costs: CBP Liquidation Explained


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

It is common practice for customs brokers to invoice for projected duty, often listed as “estimated costs,” on the invoice instead of the actual duty payable. Amounts that must actually be paid remain an “estimate” with U.S. Customs and Border Protection (CBP) until “liquidated.” The liquidation process can be lengthy, therefore “estimated costs” are used until such time as the final determination is set by CBP.

According to CBP, liquidation is defined as, “the final computation or ascertainment of duties on entries for consumption or drawback entries.” (Source: 19 CFR §159.1)

The Liquidation Process

Importers are required to declare imported goods to CBP in the form of an entry, often prepared by a customs broker. Based on the value of the goods and H.S. tariff classification, duties and taxes are calculated and paid to CBP either direct by the Importer of Record (IOR), or by the customs broker on behalf of the IOR. CBP will review the entry for duty and tax accuracy (during the pre-liquidation period) and either agree with the calculations as paid or inform the customs broker or IOR of the recalculated amounts and any duties owing or payable. CBP will then liquidate the entry 314 days after entry submission.

Liquidation can be extended upon request, however the IOR must provide reason to do so. CBP is also at liberty to extend this time frame if the duty payable amounts are in question. Extensions are granted in one year increments and cannot be extended more than 3 times.

Anti-dumping and or countervailing duty investigations can cause the liquidation process to be suspended, as can a number of other issues, such as reconciliation entries our outstanding ruling requests.

Many IORs ask how they will know when the liquidation has been completed. Importers will receive a Courtesy Notice of Liquidation on a form 4333A, which utilizes the date of the actual liquidation. This notice requires no further action apart from record keeping requirements. However, if there is additional duty owing, the Courtesy Notice of Liquidation will be pink and if customs has extended or suspended the liquidation, this will be indicated on the form.

While the liquidation of entries may seem like a simple matter, it is important that importers review their liquidation notices for anomalies such as extensions, suspension, changed status, change in amounts due, etc. While the majority of entries do liquidate on schedule and as expected, there can be surprises. Should you receive a liquidation notice that does not match your expectations, get in touch with your customs broker for clarification as soon as possible in order to maintain your legal right to protest the matter should you find it objectionable.

Have you received a questionable liquidation notice? Share with us in the comments section below or email us at Ask Your Broker.

 
 

Freight Forwarders Take Note: eManifest in effect November 7, 2016


Canada Border Services Agency (CBSA) has announced that bonded and non-bonded freight forwarders, who are responsible for consolidated imports are required to transmit advance house bill data electronically for in-bond and in-transit shipments commencing November 7, 2016.

The implementation timeline as it applies to eManifest requirements for freight forwarders is as follows:

  • November 7, 2016 to January 10, 2017
    Transition period during which penalties for non-compliance will not be issued. CBSA will work closely with freight forwarders on corrective measures to become compliant.
  • January 11, 2017- July 11, 2017
    Non-compliant freight forwarders may be issued zero-rated (non-monetary) penalties under the CBSA Administrative Monetary Penalty System (AMPS).
  • July 12, 2017
    Freight Forwarders deemed non-compliant may be issued monetary penalties.

CBSA encourages freight forwarders to adopt the eManifest requirements now before they become mandatory. By doing so freight forwarders will have time to adjust to eManifest processes and correct problems effectively reducing the risk of non-compliance.

Start to prepare now:

  1. Ensure you have a valid CBSA-issued 8000-series freight forwarder carrier code and that CBSA has your current company contact information. For detailed information on obtaining a carrier code visit the Commercial Carrier section of the CBSA website.
    Choose a transmission option. Available options included:

    1. Electronic Data Interchange (EDI)
    2. Third party service provider (Borderpro)
    3. CBSA’s eManifest portal
  2. Secure a copy of the technical reference chapter of the Electronic Commerce Client Requirements Document (ECCRD) – Chapter 5 and 8. These chapters provide the business rules and data requirements when transmitting data to CBSA. Contact the CBSA Technical Commercial Client Unit (TCCU) for a copy.
  3. Review the tools, resources and client support available on the CBSA website.

Available eManifest filing options:

  • Full-service filing as primary service provider – For carriers who would prefer Pacific Customs Brokers to file eManifest on their behalf.
  • Full-service filing as secondary service provider – A backup option for carriers that are registered with another third party service provider, or who plan to use the CBSA web portal in the event of system failures, power outages, internet connectivity issues, etc.
  • Self-filing (partial) – For carriers choosing to enter eManifest data themselves.Note: Pacific Customs Brokers offers 24/7 carrier support with all of our service options listed above.

We are a third party service provider and know how to be compliant with filing your ACI eManifest. Contact us at 855-542-6644 or leave us a comment in the comment section below.

 
 

Are You Subject to a U.S. Customs Audit?


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

All companies importing goods into the U.S. are subject to audit – no matter their size, scope of business or resident or non-resident importer. Therefore it’s important to know what U.S. Customs and Border Protection (CBP) looks at when determining who to audit.

CBP utilizes a strategically layered risk management approach based on the potential impact of non-compliance in order to better focus on those areas of importing which may cause significant revenue loss, harm to the U.S. economy, or threaten the health and safety of the American people.

Priority Trade Issues

Customs publicizes a list of Priority Trade Issues (PTIs) which is reviewed and updated periodically. Currently, the following issues are ones that customs considers to be high-risk:

  • Anti-dumping duty
  • Countervailing duty
  • Import Safety
  • Intellectual Property Rights
  • Textiles
  • Trade Agreements

While this list by no means restricts customs from conducting audits on transactions that fall outside of these categories, it does provide a general idea of where their primary focus presently resides.

In determining the likelihood of your firm undergoing a U.S. Customs audit, there are all sorts of other considerations which come to bear and may include:

  • Total value and/or volume of your imports
  • Variety and chapters of H.S. classification
  • Special classes of entry, such as Temporary Importation Bonds (TIB), or U.S. Goods Returned (USGR)
  • Related party transactions
  • Your firm’s internal controls, compliance policies and record keeping practices
  • Prior audit history
  • Prior penalty history

We consider that there is a clear foundation on which the adequacy and accuracy of your customs declarations stand. These include tariff classification, country of origin, and valuation. Most importers are aware of the importance of ensuring that their tariff classification is declared correctly, and they know that they must declare the proper country of manufacture of the goods, and that those goods are required to be marked with the country of origin prior to import. Valuation, however, can definitely be a trip hazard to unwary or uninformed importers. This article speaks directly to that matter.

As an Importer of Record (IOR), whether a resident of the United States or a non-resident, it is your explicit responsibility to act with reasonable care. CBP’s reasonable care standards are clearly defined, and more information can be obtained on that subject referenced in this paper.

Transaction Value (TV) is the most usual valuation methodology, and used appropriately, does fit the most frequent type of transactions. Transaction value or TV can be defined as “the price paid or payable for the merchandise.” There are a number of possible influences that may prohibit declaring TV on your imports, including:

  • Related transactions may not be eligible, depending on a number of factors
  • Leased or loaned equipment is not eligible for TV
  • Sample or “no-charge” transactions
  • Consignment shipments
  • Assists that the buyer provides to the seller must be taken into consideration
  • Other additions, such as packing, commissions, royalties, transportation must all be added to the “price paid or payable” for the merchandise

These are simply a few of the matters that must be considered when you are determining the value declared to customs.

Additional Resources

Informed Compliance Publications available on the U.S. Customs and Border Protection website include a number of excellent publications. We suggest the following:

  • Reasonable Care
  • Bona Fide Sales & Sales for Exportation to the United States
  • Customs Value
  • Customs Value Encyclopedia
  • Determining the Acceptability of Transaction Value for Related Party Transactions
  • Proper Deductions for Freight and Other Costs

Customs Audit Assistance Services

If you have reason to believe that your valuation declarations may have the potential to raise flags during a customs audit, please give us a call to discuss this further. We have the expertise to guide your company through the audit process.

Preparing for a Customs Audit

To learn more and gain insight on the customs audit process, consider attending an upcoming seminar. For a session that will guide you through the maze of regulations that determine transaction value attend our upcoming Customs Valuation Seminar. If you are importing and exporting goods into the United States, you will also find our U.S. Trade Compliance Seminar of interest.

If you wish to know more about this important topic or wish to share your experiences please leave your questions or concerns in the comments section below or email us at Ask Your Broker.