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.

 

 

 
 

Highway eManifest: A Year in Review


 

It has been just over a year since eManifest became mandatory for highway carriers. On July 10, 2015, full compliance of eManifest came into effect and since January 11, 2016, non-compliant carriers may have been issued a Administrative Monetary Penalty System (AMPS) penalties.

The Canada Border Services Agency (CBSA) at the Pacific Highway port of crossing reports that for the most part, carriers have been compliant. However the occasional carrier has arrived without an eManifest filed. Additionally, some carriers do not report multiple pickups on a single Pre-Arrival Reporting System (PARS).

Here is a quick review of how a carrier can be compliant when filing an eManifest with CBSA:

  • Transmission of Electronic Data Interchange (EDI) cargo and conveyance data must be received and validated by CBSA no later than one hour before the arrival at the First Port of Arrival (FPOA).
  • All cargo data must be accepted by CBSA and on file in order to be subsequently linked to a conveyance. If a conveyance is transmitted quoting a cargo control number (CCN) that is either not on file or in reject status, the conveyance will be rejected.
  • The highway cargo submission will include but is not limited to:
    • A CCN that begins with the carrier’s 4-digit alphanumeric, CBSA-assigned carrier code followed by a unique reference number assigned by the carrier or service provider
    • Port of report and port of destination
    • A description of the goods
    • Shipper and consignee name and address
  • The CCN and Conveyance Reference Number (CRN) cannot be the same.
  • A machine readable bar code must be presented to the officer at the FPOA. The bar code must either be the CRN or the CCN or both.
  • Unless subject to an exemption or exception (see ECCRD or D-Memorandum for exemptions and exceptions) the carrier must provide a cargo submission to the CBSA for each shipment destined to Canada not being cleared as CSA.
  • Changes (pre-arrival) or amendments (post-arrival) to cargo data should be made as soon as they are discovered. Electronic changes by clients will be accepted up to the FPOA of the goods.

Failure to submit an eManifest or report all shipments can lead to a penalty of $2000 to $8000 Canadian Dollars per shipment not reported. Additionally, the carrier’s truck and shipments can be refused entry until an eManifest is filed within the prescribed time limits.

Pacific Customs Brokers is a third party service provider and knows how to be compliant with filing your ACI eManifest. Contact us at 855-542-6644 or email us [email protected]

 
 

Customs Brokerage: What Is Your Perspective?


What is your perspective on customs brokerage? Customs brokerage services are often viewed at surface level on price and speed of entry. However, much like an iceberg, what lies below the surface can sink your ship unless you have been made aware of its presence and have the necessary partner resources to navigate around the hidden dangers. Any thought towards accuracy, completeness and compliance is often secondary as there are always other immediate threats more visible to the eye that require one’s attention. With an ever increasing focus on trans-border security, it is your responsibility as the Importer of Record (IOR) to certify that customs regulations are complied with. It is in your best interest to ensure you have partnered with service providers that view customs brokerage as a whole, are able to identify hidden areas of risk in your path and work with you to avoid them.

Common Hidden Areas of Risk

  • Erroneous and/or missing documentation
    This could cause delays while the information is being retrieved or, if not caught, could result in further scrutiny by customs at the first port of arrival or worse, in a post-entry audit.
  • Mislabeled goods and/or incorrect origin
    Some imported goods must be marked with Country of Origin (COO). Often times the country of origin and country of manufacture are confused. Country of origin is the country of export, whereas the country of manufacture is where the items are manufactured. Failure to comply with this regulation could result in denial of entry with zero compensation for outlaid costs such as freight shipping.
  • Inexact piece counts and under-declared goods
    Penalties and seizure of goods are often the result of shipments where the physical goods shipped do not match the customs documentation used to prepare the declaration.
  • Misclassified goods
    A lack of detail on the customs documentation can lead to the misclassification of goods which can result in incorrect duty payouts and penalties to the importer of record.
  • Incorrect valuation
    All imported goods must have a value regardless if they are product samples, replacements (warranty and non-warranty), inter-company transfers or no-charge items. Are there any costs included in the value that should be added or deducted for customs purposes? The valuation method utilized must meet customs valuation criteria for the transaction taking place.
  • Inaccurate use of Free Trade Agreements
    It cannot be assumed that goods coming from a free trade region qualify under that FTA’s eligibility rules to benefit from a potential duty-free status. A valid FTA certificate must accompany the eligible goods in order to relieve any duties.

Ensure that you work with international trade professionals that will assist in keeping an eye out for hidden areas of risk by viewing customs brokerages services beyond the surface.

How do you view customs brokerage services? Share your iceberg experience with us in the comments section below or email us at Ask Your Broker.

 
 

Have You Received an Informed Compliance Letter from U.S. Customs?


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

In an apparent effort to increase enforcement activities, U.S. Customs and Border Protection (CBP) has been issuing Informed Compliance Notification (ICN) letters to a variety of importers lately with a subject line, “Distribution of Informed Compliance Publications and Other Informative Documents.” They may particularly be targeting importers whom they have identified as having specific high-risk imports OR non-compliance issues with customs regulations, and are thus quite susceptible to undergoing a comprehensive regulatory audit. The letters are being sent accompanied with a DVD that contains a number of Informed Compliance Publications (ICP). These very valuable and informative ICPs can also be found here on CBP’s website.

You are encouraged to review those that pertain to your import activities, and most particularly those regarding entry requirements, valuation, tariff classification and country of origin.

While we have yet to be made aware of our clients having received such letters, we would like to alert you to be on the watch for any correspondence that your firm may receive from CBP, and strongly urge you to contact us immediately. Please be reminded that CBP is allowed to conduct full audits on your importing activities into the U.S. whether or not you are a U.S. domiciled company.

CBP has stated that these ICNs are generally intended to encourage importers to conduct internal reviews of their importing practices, and to file prior disclosures in cases where there are discrepancies or deficiencies discovered.

Important: Prior to communicating with U.S. Customs directly we emphasize the importance of contacting us first and as soon as possible after receiving any correspondence from CBP. As your customs broker, we are generally copied in on most correspondence from CBP to our clients; however, we do not anticipate being notified of this particular outreach unless we hear directly from you.

Pacific Customs Brokers stands ready to assist and guide you on all customs matters, and we look forward to hearing from you.

Have you received an Informed Compliance Notification recently or in the past? Did you wait, respond immediately or contact your customs broker first? Share your experience in the comments section below or email Ask Your Broker. However, if you have received a letter recently, call us immediately.

 
 

Earn Credits Towards Your Professional Development with Pacific Customs Brokers


Are you caught up on your professional development credits for 2016?

The responsibility of understanding and abiding by trade regulations falls upon all of us playing a part in global trade. We want to help your business import and export successfully. For this reason we offer a series of seminars and webinars that will educate you on just that and contribute to your professional designations’ maintenance requirements.

Whether you are a Canadian or U.S. Certified Customs Specialist (CCS), a Certified Trade Compliance Specialist (CTCS), a Certified Export Specialist (CES), a designate with the Law Society of British Columbia (LSBC) or accounting professional, taking any of Pacific Customs Brokers’ seminars and webinars will earn you maintenance points, credits and hours towards your professional designations.

Review and plan your maintenance for the second half of 2016 here.

CSCB NEI LSBC
Webinar CCS CTCS CCS CES
CDN Importing for Beginners Part 1
CDN Importing for Beginners Part 2 *5
US Importing for Beginners Part 1 1
US Importing for Beginners Part 2 *5 1
FDA Regulated Goods *5 1
CFIA Regulated Goods *5
NAFTA for Beginners Part 1 1 1
NAFTA for Beginners Part 2 *5 1 1
*Taking any three of these 1-hour events qualifies for 5 CCS points. To claim your points, contact Adriana Zamora with the three course names upon completion of the third.
Seminar
CDN Trade Compliance Part 1  5  5  –  –  –
CDN Trade Compliance Part 2  5  5  –  –  3
Exporting from Canada  5  5  3  3  –
US Trade Compliance Part 1  5  5  3  –  –
US Trade Compliance Part 2  5  5  3  –  3
HS Tariff Classification  5  –  6  –  4
FTAs & Rules of Origin  5  –  5  –  –
Customs Valuation  5  –  3.5  –  –
CFIA  5  5  –  –  –
FDA  5  5  3  –  –
C-TPAT & PIP  2.5  2.5  2  2  –

 

If you have never attended one of our courses before, the following information might help you decide on attending the next one.

Seminars and Workshops

At these in-person sessions, our experts share their knowledge on cross-border and international shipping. They will keep you current with customs and other government department regulations. You will learn the best practices on being compliant as an importer and/or exporter, helping you expedite shipments rather than trigger costly delays. The benefits of attending an in-person seminar or workshop include:

  • All day access – Get our experts to answer your questions one-on-one
  • Cost-effectiveness – More affordable than industry standards
  • Range of topics – Choose from a wider variety of seminar topics than offered in our webinar format
  • Certificate of Completion – Receive a certificate for each course you attend
  • Case studies and real-life examples – Examine other attendees’ trade compliance issues
  • Networking – Connect with other like-minded professionals
  • Handouts – Take home your own set of course material
  • Industry recognized sessions – Earn points towards maintenance of your industry designations

Webinars

Our webinars are designed to meet the demands of the global trade community. These live webinars are a convenient way for trade professionals to stay ahead of new regulations with international trade and gain additional knowledge in key areas. The benefits of attending an online course include:

  • Global accessibility – Travel is removed from the equation for companies with multiple locations or branches
  • Cost-effectiveness – Complimentary part 1 and more affordable than industry standards
  • Concise training – In a fast-paced industry, efficiency becomes just as important as staying compliant
  • Convenience – Attend from the comfort of your desk
  • Industry recognized sessions – Earn points towards maintenance of your industry designations

Have a question about any of the seminars or webinars listed above? Use the comment section below or email Ask Your Broker.

 
 

Advance Trade Data: End State eManifest Process for In-Bond Shipments


 

 

 

 

Currently carriers and freight forwarders who have filed security with Canada Border Services Agency (CBSA) are considered “bonded” and therefore permitted to carry goods in-bond from the First Port of Arrival (FPOA) to an inland destination for examination and/or release. The trade community benefits greatly from this type of movement of goods and CBSA recognizes that to not allow this would pose a significant challenge.

With the implementation of eManifest, CBSA continued to allow in-bond movements as long as the pre-arrival data was provided by the carrier within the prescribed time frames. However, once mandatory, in addition to the requirement for highway carriers to provide advance cargo and conveyance data, importers will be required to submit Advance Trade Data (ATD) for that in-bond shipment in a new end state process.

Advance Trade Data

The ATD elements that importers will soon be required to submit include:

  • Importer of Record (IOR) number, name and complete address
  • Country/State of Origin
  • Country/State of Export
  • Commodity H.S. code to the 6th digit
  • Name and complete addresses of Manufacturer/Supplier, Seller/Vendor, Exporter (if different than the seller), Buyer/Purchaser, and Consignee (if different than the buyer)

Once ATD is mandatory, CBSA will receive and risk assess the carrier’s pre-arrival cargo and conveyance data as well as the importer’s ATD. If the importer’s ATD submission has not been received upon the carrier’s arrival at the FPOA, CBSA will determine:

  • If the carrier and driver are not members of a CBSA Trusted Trader Program, the shipment will not be permitted to move in-bond until the ATD is provided and risk assessed.
  • If the carrier and driver are approved members of a CBSA Trusted Trader Program, the shipment will be permitted to move in-bond to an approved warehouse.

Trusted Trader Programs

This end state process provides benefits to carriers who have invested in these programs.

CBSA has not yet announced when ATD for highway shipments will become mandatory for importers; however, for carriers who transport goods in-bond into Canada, it may be prudent to research becoming a member of a Trusted Trader Program if not a member already.

Are you an approved member of a Trusted Trader Program? Which program did you choose? Share your experience of the application process or any tips you may have in the comments section below or email us at Ask Your Broker.