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.

 

 

 
 

Single-trip Bonds: An Alternative for Non-Bonded Carriers


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

What is a non-bonded highway carrier to do when they have an opportunity to pick up a load that needs to travel in-bond through Canada? One alternative is to obtain a single-trip bond.

Bonds issued by the Canada Border Services Agency (CBSA), whether single-trip or annual, allow highway carriers to move goods inland to a sufferance warehouse for release or ‘in-transit’ through Canada for furtherance to a point outside of the country.

In order to become an annually bonded carrier with CBSA, carriers must have a carrier code, post financial security of up to $25,000 as well as fill out an application. However, to obtain a single-trip bond the process can be completed on an as-needed basis.

A single-trip bond can be acquired by the carrier directly through CBSA at the First Port of Arrival (FPOA) by filing security using cash or certified cheque or by engaging a customs broker who provides this service.

Goods moving on a single-trip bond are linked to the carrier code of the carrier moving the goods, a bond authorization number and Cargo Control Number (CCN) printed on a Cargo Control Document (CCD). This allows for reporting, tracing and acquittal of each shipment by CBSA.

CBSA expects the single-trip bond process to be limited and declining in use and as such this process remains paper-based.

The process for a single-trip bond movement of goods:

  1. The highway carrier will transmit cargo and conveyance data as a frontier release prior to arriving at the FPOA.
  2. At the Primary Inspection Line (PIL), the driver will declare that a single-trip authorization is required to move the goods inland. The carrier will then provide a lead sheet to the Border Services Officer (BSO) with the a bar coded CRN or a bar coded CCN and handwritten CRN.
  3. The BSO will refer the driver inside for primary processing to apply for a single-trip bond.
  4. The carrier will present a completed paper re-manifest (A8A) to the BSO. The officer will stamp the A8A allowing the carrier to move the goods inland. The clearance is then processed as an in-bond movement.
  5. The A8A copies will be split as they were pre-emanifest carriers will not be penalized for handwriting the CCN onto the A8A being used to re-manifest, single-trip in-bond movement.
  6. Goods must go to the destination that CBSA has allowed the carrier to carry the goods to as per the bond. The single-trip bond naturally ends at the destination of the goods.
  7. The carrier is required to retain all records relating to this single-trip bond for three (3) years plus the current year.

Pacific Customs Brokers can assist carriers with both annual and single-trip bonds by contacting our carrier help desk at [email protected].

Have you used or are you contemplating using a Single-trip Bond? If you have recently or in the past, what were the advantages and disadvantages you have faced? Share your experiences in the comments section below or email us at Ask Your Broker.

 
 

Trade Compliance Verifications – July 2016


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Canada Border Services Agency (CBSA) publicly releases a semi-annual list of all of its active compliance verification priorities, in the interest of transparency and the promotion of self-compliance. It recently published its trade verification targets for the second half of 2016. While new targets have been added, many continue from the past. The eight new items on the list range from live plants to cell phone cases.

 

Types of Post-release Verification Processes

The CBSA manages compliance with the Tariff Classification, Tariff Treatment, Valuation, and Origin programs using the following two post-release verification processes:

1. Random Verifications

Random verifications are designed to measure compliance rates and revenue loss and the results may be used for many purposes, including:

  • Risk assessment;
  • Revenue assessment; and
  • Promoting voluntary compliance.

2. Verification priorities

Targeted verification priorities are determined through a risk-based, evergreen process, meaning that new targets are added throughout the fiscal year. Verification priorities may also be carried over from previous years.

 

Trade Compliance Verifications – July 2016

A summary of the current targeted priorities can be found below:

Tariff Classification (TC) HS Number(s)
Curling Irons (Round 2) 8516.32.10
Spectacle Lenses (Round 2) 9001.40.10 and 9001.50.10
Furniture for Non-Domestic Purposes Various goods of Headings 94.01 and 94.03
Seaweed (Round 3) 1212.21.00 and 1212.29.00
Dextrins and Other Modified Starches (Round 3) 3505.10.90
Disposable and Protective Gloves (Round 3) 3926.20.10 and 4015.19.10
Coconut Milk from Asian Countries (Round 2) 1106.30.00, 2008.19.90 and 2106.90.10.90
Batteries 8506.10.10 and 8506.50.10
Gazebos (Round 2) 9406.00.90.20
Footwear ($30 or more per pair) (Round 2) 6403.59.20 and 6403.99.30
Hair Extensions (Round 2) 6703.00.00
Machinery for Public Works 8479.10.00
Special Purpose Motor Vehicles 8705.90.90.90
Polyurethanes in Primary Forms 3909.50.00
Parts for Power Trains Heading 87.08
Geophysical and Oceanographic Instruments Heading 90.15
Cereals Heading 10.08
Articles of Apparel and Clothing Accessories (Round 2) Heading 39.26
Bicycle Parts Heading 87.14
Articles of Plastics Subheading 3926.90
Articles of Iron or Steel Heading 73.26
Vices and Clamps Heading 82.05
Parts for Use with Machinery of Chapter 84 Heading 84.31
Tubes, Pipes and Hoses Heading 39.17
Parts of Lamps Heading 94.05
Chemical Products (Round 2) Heading 38.08
Pasta Heading 19.02
Hair Dryers and Electric Smoothing Irons Heading 85.16
Cell Phone Cases (New) Headings 39.26, 42.02 and 85.17
Mountings, Fittings and Similar Articles (New) Heading 83.02
Stone Table and Counter Tops (New) 9403.90.00
Prepared Meat of Swine (New) Heading 16.02
Live Plants (New) Heading 06.02
Interchangeable Tools (New) Heading 82.07
 Air Brakes and Parts Thereof (New) Subheading 8607.21
Handkerchiefs, Towels and Related Paper Products (New)
Heading 48.18
Valuation HS Number(s)
Apparel (Round 2) Various goods of Chapters 61 and 62
Preparations and Pastrycooks’ Products Various goods of Chapter 19
Origin HS Number(s)
T-Shirts Heading 61.09
Jewelry 7113.11.90, 7113.19.90 and 7113.20.90

As your customs broker, we make every effort to provide you with the right tools and information to ensure that your company is as proactive as possible with the CBSA. In this way, we hope to help lessen your exposure to any penalties or fines.

 

Trade Compliance Education

As part of our ongoing efforts, we offer a number of  Trade Compliance Seminars and Webinars throughout the year on trade compliance, customs audits among other subjects like, HS Tariff Classification, Free Trade Agreements and Rules of Origin, Canadian Food Inspection Agency and U.S. Food and Drug Administration. Visit our upcoming calendar today!

 

Trade Compliance Audit Assistance

Should your company get selected for a customs audit, Pacific Customs Brokers can help. Our Certified Trade Compliance Specialists will work with you to guide your business through the audit process and avoid incurring further penalties.

 

Trade Advisory Services

Our trade compliance consulting services include but are not limited to:

  • Thorough HS database review with ongoing updates
  • Current industry training and education to review transactions completed by customs brokers thereby minimizing errors
  • Experienced counsel on valuation and origins
  • Strategic advice on withstanding a customs audit
  • Firm support through the challenges of the audit process

For more information about our trade compliance audit services, contact us today or learn more at Canada Customs Trade Compliance.

 

Do you have questions about CBSA’s  July 2016 trade compliance verification priorities? Use the comments section below to leave us your thoughts 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.