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.

 

 

 
 

ACI eManifest Exemption for Empty Containers


Pallets

Instruments of International Trade (IIT) such as empty shipping tanks, pallets, baskets, bins, boxes, cartons, crates, totes and trays, also known as Ottawa File and Container Banks, may be exempt from ACI eManifest submission regulations for highway and rail carriers. As noted in the Electronic Commerce Client Requirements Document (ECCRD), these containers must be registered under Ottawa file and issued container bank numbers in order to be exempt.

In order to qualify the containers for the ACI eManifest transmission exemption, carriers must still transmit conveyance data as well as the following additional steps:

  1. Include the IIT indicator in the cargo submission.
  2. Verbally report the IIT to the Canada Border Services Agency (CBSA) officer at the First Port of Arrival.

The determination of whether the equipment qualifies as an IIT and its classification are the responsibility of the importer/customs broker and must be reported and accounted for at the first time of arrival in Canada.

Where a Container Bank has been authorized by CBSA, a company can import containers or a like quantity of similar containers on a duty and tax free basis. To operate a Container Bank, a company must apply in writing to the CBSA for authorization. The letter requesting permission to operate a Container Bank should be sent to the Manager of Regional Programs in the applicable region.

Have you used or are you contemplating using a Container Bank? If you have used the program in the past what are the advantages and disadvantages you have faced? Share your experiences in the comments section below or email us at Ask Your Broker.

 
 

ACI eManifest Requirements for Tow Truck Operators


Tow Truck

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tow truck operators towing a vehicle across the border into Canada are classified as carriers by Canada Border Services Agency (CBSA). Therefore in some cases, like other highway carriers, tow truck operators and towed equipment owners may be required to transmit cargo and conveyance data in the form of an ACI eManifest to CBSA.

CBSA has implemented an Interim Policy for ACI requirements for empty tow truck conveyances and tow trucks hauling disabled commercial vehicles.

Interim Policy Guidelines

  • An empty tow truck
    Requires only a verbal report at the First Port of Arrival (FPOA) from the tow truck operator. No ACI eManifest is required.
  • Towing a disabled private vehicle
    Requires only a verbal report at FPOA from the tow truck operator. No ACI eManifest is required.
  • Towing a disabled tractor
    A verbal report by the tow truck operator can be made at FPOA. Additionally, the empty conveyance data may be transmitted to CBSA by the carrier/owner of the disabled tractor.
  • Towing an empty trailer
    A verbal report by the operator can be made at FPOA. Additionally, the carrier/owner of the disabled trailer may transmit empty conveyance data to the CBSA.
  • Towing a loaded trailer with tractor
    The carrier/owner of disabled trailer must transmit cargo and conveyance data to CBSA. Both the Cargo Control Number (CCN) and the Conveyance Reference Number (CRN) (one of which must be bar-coded) must be provided to the tow truck operator to provide to the Border Services Officer (BSO) at the FPOA.
  • Towing a loaded trailer with no tractor
    The carrier/owner of the disabled trailer can transmit cargo data to CBSA. The bar-coded CCN must be provided to the tow truck operator for reporting to the BSO at the FPOA.

Are you a tow truck operator? Have questions or comments about ACI eManifest and the above requirements for tow truck operators? Leave them in the comments sections below or contact our Carrier Relations Liaison at 855.542.6644 or by email at Carrier Help Desk.

 
 

ACE Transition – Changes to FDA Entry Filing


Update

The U.S. Food and Drug Administration (FDA) has now completed its transition to the Automated Commercial Environment (ACE). As a result, all goods regulated by the FDA must be transmitted via ACE effective June 15, 2016 and will no longer be accepted in the previous Automated Commercial System (ACS). Additional information is now required when filing entries and corresponding entry summaries for FDA regulated goods.

What additional information will be mandatory?

  • Commodity details and intended use
  • Description of how the commodity is processed
  • Product state (i.e. fresh, frozen, shelf stable, etc.)
  • FDA product code
  • Country of production or source
  • Full and detailed invoice description
  • Full name and address of the:
    • Manufacturer
    • Shipper
    • Importer
    • Consignee
    • Consolidator
    • Farmer/grower (if applicable)
    • Processing plant (if applicable)
  • FDA registration number(s)
  • Port of entry
  • Quantity
  • Weights (actual, rather than estimated)
  • Packaging type
  • Product line value
  • Arrival date and time

Certain commodities may require additional information. Please contact Pacific Customs Brokers for additional details.

How will this affect my entry?

Pacific Customs Brokers may contact importers to obtain any mandatory information required for the entry filing with ACE and FDA.

As CBP and FDA implement this mandatory filing requirement entry filing delays are to be expected. It is imperative to note that missing information will result in additional processing delays.

Have questions or comments regarding the potential processing delays you may experience? Have tips for minimizing shipment delays? Share your thoughts with us. Leave them in the comments section below or email Ask Your Broker.

 
 

New Program Helps Exporters Develop New Markets


Export

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Small businesses in Canada can expand their horizons through a new program by the Canadian Trade Commissioner Service (TCS) that offers them an incentive to diversify their export markets. Called CanExport, the program provides, from now until the end of March 2020, $11-million per year in contributions to small and medium-sized enterprises (SMEs) across Canada that are seeking to develop their exports to a new market. The application process is simple with a quick turnaround. Applications are entirely done online and are assessed based on the information submitted by the company within 25 business days. The program is administered by the TCS, in partnership with the National Research Council of Canada Industrial Research Assistance Program (NRC-IRAP).

CanExport shares the cost of pre-approved eligible expenses for initiatives that aim to develop new markets. It is expected to help hundreds of exporters per year across the country to better compete in the global economy. The non-repayable contributions will be determined on a cost-sharing basis and can represent up to 50 percent of eligible expenses, which can include for instance travel costs, event registration, translation and contractor fees. Ranging from $10,000 to $99,999, approved contributions are made to successful SMEs via the reimbursement of certain expenses based on status reports and claims. The remainder of the funds can come from other sources, but the total of all government assistance cannot exceed 50 percent of the expenses for the project. As such, applicants need themselves to provide funds covering at least 50% of the eligible costs in order for their project to qualify.

With the help of CanExport, Canadian SMEs are encouraged to look outward Canada to expand their export capabilities. CanExport is intended to build stronger and more competitive Canadian capacity to effectively compete in the global economy, by connecting SMEs with the tools and resources they need to succeed in a new market. CanExport compliments the large spectrum of services that the TCS already offers each year to thousands of Canadian exporters. This program intends to bring companies literally to the market and to provide a “bridge” between the assistance that companies get preparing for international markets from Regional Offices of the TCS across Canada and the help they receive from Canadian Embassies and Consulates abroad, such as making introductions and facilitating contracts. Many SMEs are not used to exporting or they have experience only with more traditional markets and are concerned about the risk of developing new opportunities that can boost their prospects abroad. These new endeavors represent a certain level of risks for these companies, but CanExport is a way for the Government of Canada to share these risks so that Canadian SMEs have a greater interest to explore new markets, get out of their comfort zone and pursue new opportunities.

Is your company eligible?

To be considered for CanExport funding, a firm must:

  • Be a for-profit company in Canada, either incorporated or a limited partnership;
  • Have a valid CRA business identifier number;
  • Have at least one (1) and up to 250 full-time equivalent employees that can be verified by the CRA based on payroll accounts;
  • Have $200,000 to $50 million in annual revenues, which can be verified by the CRA based on the most recent GST declarations of the company.

Is the market your company targets eligible?

It is important to mention that the objective of this program is to help SMEs export to a new target market, which the program guidelines define as a foreign country where the applicant has not exported or had locally based operations for at least 24 months. It is therefore key that applicants be able to demonstrate that the market they target is a country where they have not exported. When opportunities exist for companies to expand in markets where they are already exporting, though a financial support from our program is not possible, we still strongly encourage them to contact the TCS to obtain assistance in order to prepare for international markets and receive services and support throughout the implementation activities. The TCS can also help develop your business internationally by identifying market opportunities, barriers and trends or by making introductions to qualified foreign contacts. For more information on the TCS services offered, and to find the regional trade commissioner nearest to you who is responsible for your sector of activity, please click here.

Beyond the requirement for the market to be a new one for the applicant, the program is otherwise open to all markets, except in countries where sanctions apply to the planned activities. Though many experienced exporters might contemplate a project to develop a more difficult market, new exporters may be looking to fairly traditional countries as a first step to diversify its customer base. In fact, for many companies that have never exported before, even entering the U.S. market can be quite an adventure and might require some financial support.

Are your activities eligible?

Proposals will be evaluated based on the viability of the applicant’s export business case and whether the project is expected to yield incremental results and benefits to Canada. There will also be an emphasis on whether the activities align with the Government of Canada’s trade strategies and on whether there is a market potential in the targeted country for the products or services the applicant intends to export. The assessment could also, when applicable, include elements such as the company’s export readiness and business history. The project and export business case, as illustrated via the online application, can include many different types of activities, all of which could be considered eligible as long as they meet the following: aim at promoting international business development; go beyond the company’s core-business activities; are clearly linked with the applicant’s long-term international business development strategy for the chosen target market; bear potentially significant benefits for Canada and for the company’s growth; are supported by sufficient detailed information on the nature and extent of the proposed expenses; and, of course, as long as the proposed course of action is strongly justified by the rationale outlined in the application. Examples of eligible activities could include, but not be limited to, the following: travel to meet with potential clients or agents; attendance at trade fairs, seminars and conferences; participation in trade missions; the development or adaptation of marketing tools to suit new markets; legal fees involved in agreements with local partners and distributors; consultant fees for a custom-market study, etc.

For more information on the CanExport grant, please click here.

Guest Blog Author: Elise Racicot, CanExport Program Manager, Global Affairs Canada

Have questions regarding the eligibility of your company and its activities? Have you heard or considered the CanExport grant before reading this blog? Let us know in the comments below or email us at Ask Your Broker.

 
 

How Long Does It Take To Process a Canadian Customs Entry With Pacific Customs Brokers?


 

Processing times are dependent on the completeness of documentation received, the complexity of the shipment and the amount of time required by Canada Border Services Agency (CBSA) and Other Government Departments (OGD) to provide accepted status. Although some shipments can be processed in a matter of minutes, others require more attention to detail. All shipments cleared with Pacific Customs Brokers receive a high level of scrutiny in order to proactively work towards our client’s compliance record.

Standard Processing Times

Receipt and prioritization for processing = 30 minutes

Once shipment documentation is received, it will be placed in a queue based on the estimated time of arrival (ETA) at the specified port. This process can take a maximum of 30 minutes.

Review of documentation = 2 hours
It may take up to two hours to review each shipment to ensure that all necessary information and documentation required for entry into Canada has been received including:

Required Documents

  • Canada customs or commercial invoice
  • Certificate or permit required by participating government agencies (if applicable)
  • Certificate for applicable free trade agreements (if applicable)

Required Invoice Information

  • Vendor name and address
  • Importer name and address
  • Commodity description
  • Country of manufacture
  • Quantity and weight
  • Value
  • Condition of sale
  • Currency of settlement
  • Reference number

Required OGD Information

  • These agencies require specific information and documentation depending on the department and shipment commodity.

Tip: Unsure if your shipment is subject to OGD review? Click here to check.

Entry processing of complete documentation = 30 minutes
Processing the shipment can commence once all required information and documentation is received. On average it takes 30 minutes to enter and transmit a shipment’s information to CBSA and applicable OGDs such as the Canadian Food Inspection Agency (CFIA).

CFIA review = 1 hour
If the shipment has goods regulated by the CFIA, processing times may increase by one hour.

CBSA review = 1 hour
Always allow up to one hour for CBSA to accept a shipment’s release request.

Top Reasons a Shipment is Not Accepted For Entry Within These Timelines

  1. Insufficient notice of shipment: Shipment documentation was provided less than 3 hours prior to arrival at the port of crossing and therefore not allowing the customs broker to succeed in obtaining an accepted status with CBSA.
  2. Missing documentation and/or information: If any information or documentation is missing, steps are taken to obtain it either through the importer of record (IOR) or the carrier. Missing information and or documentation will always result in delayed processing times.
  3. Highly complex entry: Some entries take longer to obtain accepted status due to their complexity and or amount of commodities listed on the invoice.
  4. Client account matter in pending status: Accounts are required to be in good standing in order for the customs broker to adequately work on the importer’s behalf. For example, if the customs broker is awaiting receipt of a signed Power of Attorney (POA), they are unable to process the entry until its receipt, regardless of having received complete shipment documentation.

Minimum Documentation Submission Times

Considering the timelines noted above, it is highly recommended that carriers submit shipment documentation utilizing the following guidelines:

Shipment Contains

Goods not regulated by OGDs

OGD regulated goods

CFIA regulated goods

Time Required Prior to Port Arrival

3 hours

4 hours

5 hours

Tip: Further steps can be taken by the carrier to ensure efficient border crossing. Click here for additional steps.

Pacific Customs Brokers understands the many variables that can change anticipated timelines. Every effort is made to ensure accepted status is obtained from CBSA prior to the carrier’s estimated time of arrival at the port of crossing despite the amount of time available to clear the shipment.

How To Check The Status of Your Shipment

It is recommended that carriers check the status of their shipments into Canada at least one hour prior to arrival at the port in order to mitigate delays. Carriers can check the status of the release with Pacific Customs Brokers in any of the following ways:

iPhone App

Mobile Website

PARS Lookup

Text Message

Phone Us

Available free via the App Store

Available via the internet browser on mobile devices

Available via our homepage pcb.ca

Sign up to receive a text the moment your shipment is accepted

Available to you 24/7, 365 day a year

Have questions or comments regarding the processing times outlined above? Have you used any of the listed methods of checking your shipment status? Share your experiences with us. Leave them in our comments section below or email Ask Your Broker.