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.

 

 

 
 

What You Need To Know Regarding the Section 321 De Minimis Value Increase


Value price

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

On February 24, 2016 President Barack Obama signed into law the Trade Facilitation and Trade Enforcement Act of 2015 (H.R. 644) (TFTE), also referred to as the Customs Reauthorization bill. This law addressed a bevy of trade topics, including the de minimis value for the entry of low value goods. Commonly referred to as Section 321, this legislative measure raised the Section 321 de minimis value from $200 or less to $800 or less. The Section 321 provision allows for low value entries, valued at $800 or less, to enter into the commerce of the U.S.duty free and without formal entry. For many importers this was very goods news as it reduced the amount of paperwork required on low value shipments, but it also created a potential compliance pitfall.

Section 321 Product Restrictions:

Goods requiring inspection as a condition of release, regardless of value, merchandise subject to Anti-Dumping / Countervailing duty (ADD/CVD), and certain products regulated by the following Partner Government Agencies (PGAs), may not qualify under Section 321:

  • Food and Drug Administration (FDA)
  • Food Safety Inspection Service (FSIS)
  • National Highway Transport and Safety Administration (NHTSA)
  • Consumer Product Safety Commission (CPSA)
  • United States Department of Agriculture (USDA)

Section 321 Daily Restriction:

As mentioned by authors Teresa M. Polino, Orisia K. Gammell and Julia L. Diaz in the Arent Fox LLP article Did You Know: The 2015 Trade Enforcement Act Can Save Importers Money?, “this increase applies to shipments of articles imported by one person (e.g., a company) on one day, other than in the case of articles sent as gifts from a person in foreign countries or in the case of articles accompanying and for the personal or household use of a person arriving in the U.S.”

Under this regulation importers are only allowed to take advantage of the Section 321 benefit on one single transaction per day.

Carriers may make a Section 321 claim in conjunction with their eManifest filing, subsequently reducing the amount of paperwork on such low value transactions.

Best Practices:

Ensure that your carrier is not making multiple Section 321 claims. Carriers may elect to make the Section 321 claim in order to expedite the clearance process being unaware of whether the importers daily allowance has been reached or not. To avoid hefty penalties it is recommended that shipment filings be highly regulated in the following ways:

  • Identify the particular shipment the Section 321 claim will be used each day
  • Request that a formal entry be made on all other entries
  • Use the services of one customs broker to ensure import/export transactions are filed in a consistent manner
  • Build strong communication lines with the logistics team including carriers, freight forwarders, and customs brokers

Have questions or comments regarding this provision and how you can ensure that you are taking advantage of Section 321 within the compliance guidelines? Leave them in our comments section below or email Ask Your Broker.

 
 

ACI eManifest: Common Carrier Questions 4 Months In


Question MarkOn January 11, 2016, Canada Border Services Agency (CBSA) began to issue monetary penalties for non­-compliance with ACI eManifest legislation. The first four months of eManifest has presented some challenges for carriers lacking clarity on certain aspects of compliance. Below is a list of common questions our carrier network are inquiring about.

Q. If a carrier is not transporting any goods and the conveyance is empty, are they required to transmit pre­-arrival conveyance data to CBSA?

A. Although the CBSA encourages carriers to transmit pre-­arrival eManifest data for empty conveyances, it is currently not a mandatory requirement. Refer to Customs Notice 15­-030.

Q. Is a handwritten Conveyance Reference Number (CRN) on an eManifest Lead Sheet acceptable?

A. The CBSA prefers the CRN to be bar­coded but will accept it as handwritten as long as the Cargo Control Number (CCN) is bar­coded. Either the CCN or CRN must be machine readable or bar­coded.

Q. Will the CBSA Border Services Officer (BSO) stamp the Pre-Arrival Review System (PARS) documents when they are presented to the officer by the driver along with the mandatory eManifest lead sheet?

A. Yes. When the driver presents both the eManifest lead sheet and PARS documents for shipments that are being released at the border, the BSO will stamp the lead sheet as Proof of Report, and also stamp the PARS documents when the goods are released. The driver must present them on their own as the BSO will not request them. The PARS documents should be retained by the carrier as Proof of Release.

Q. In the following scenario, will the carrier be issued a monetary Administrative Monetary Penalty System (AMPS) penalty?
A shipment crossed and was released by the BSO at the First Port of Arrival (FPOA) but only the eManifest lead sheet was stamped. Now the carrier is undergoing a CBSA Transportation Audit and the carrier is unable to provide CBSA with proof of release (electronic or paper).

A. Not necessarily. If the CBSA is able to verify in the CBSA system that the goods were properly accounted for, this will suffice that the carrier met their obligation. If the carrier does not receive proof of release via the CBSA Release Notification System (RNS) then the carrier should be providing PARS documents to be stamped by the BSO at the FPOA. If the PARS documents were not stamped at the time of crossing, the carrier can request the BSO at the FPOA to stamp the PARS after the fact if the CBSA can verify in their system that the goods were in fact reported and released.

These remedies do not preclude the carrier from retaining accurate records of report and release for audit purposes. Records must be either electronic or paper and available upon request of CBSA.

Q. If a carrier successfully transmits the required pre­-arrival eManifest data to CBSA and has a PARS release package set up for FPOA, arrives at the FPOA and presents an eManifest lead sheet only, is this sufficient to prove release of the PARS?

A. Yes. RNS participants can rely on the electronic system for Proof of Release, however if the carrier still requires a stamp on the PARS document to satisfy Proof of Release, then it is the carrier’s responsibility to present the PARS documents to the BSO to stamp and to retain those documents for audit purposes.

For additional information refer to Memorandum D3-4-­2.

Did You Know?

Pacific Customs Brokers’ Border Pro for Carriers service was created to help carriers, truckers, drivers, dispatchers and self-carrying importers seamlessly clear customs while saving time and money. Border Pro for Carriers eManifest filing services can assist you in submitting all relevant information to Canada Customs within the required time period to ensure your trucks cross the border as quickly and efficiently as possible.

What has your experience been crossing the Canadian border?  Share them in our comments section below or email us at Ask Your Broker.

 
 

3 Steps to Importing a Road Vehicle into the USA


3 Steps to Importing a Road Vehicle into the USA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

With the current exchange rate many Canadian used vehicles are being actively sourced by U.S. buyers. Importing a road vehicle into the U.S. can be difficult; however, we have broken down the process into these three easy steps:

1. Ensure the vehicle is admissible for import.

Vehicles will need to have both an Environmental Protection Agency (EPA) sticker and a Department of Transportation (DOT) sticker affixed to the vehicle. If the vehicle is 21 years old it is exempt from the DOT certification sticker. If it is over 25 years, it is exempt from the EPA certification sticker. If the vehicle is without a DOT sticker, it may still be eligible for import; however, it will need to be imported through a registered importer who is required to hold the vehicle for a minimum of 30 days after import. Vehicles with missing EPA stickers will need a letter of conformity from the manufacturer in order to import the vehicle. If a letter of conformity cannot be obtained the vehicle is not admissible for import into the U.S.

Additionally, if the vehicle holds a rebuilt or salvaged title it is not admissible for import into the U.S.

2. Create/obtain the required documentation.

Since U.S. Customs and Border Protection (CBP), the DOT and EPA are involved with vehicle imports, it is important to understand that each agency has specific documentation requirements. The following list of forms will need to be accurately completed and submitted:

  • U.S. Customs or Commercial Invoice
  • DOT Vehicle Declaration Form (HS-7)
  • EPA Vehicle Declaration Form (3520-1)
  • Copy of the vehicle registration

3. Have the vehicle steamed, sprayed or cleaned thoroughly before shipment.

The U.S. Department of Agriculture requires that the undercarriage of the imported vehicle be free of foreign soil to safeguard against importation of dangerous pests.

Wherever you may be in the purchasing process whether you are currently importing a vehicle or still in the contemplation stage and need assistance, please contact us.

Have you successfully or not quite successfully imported a vehicle into the USA? What has your experience been? Share it in our comments section below or email us at Ask Your Broker.

 
 

The Downside Of Using Multiple Customs Brokers


The Downside Of Using Multiple Customs Brokers

There is no question that the world is now a global marketplace. Canadian importers have access to vast amounts of products from multiple suppliers in countries around the world. There are a number of different modes of transportation and carriers available to move your goods, so it makes sense to use multiple customs brokers as well, right? On the surface that would seem to make sense but let’s dig a little deeper to see why that is not a good option.

The Responsibility of an Importer of Record:

In the eyes of the Canada Border Services Agency (CBSA) each importer is one unique entity with a single importer number that identifies your company. Regardless of who the supplier is, what the goods are, how they are transported, which transportation company is used or which customs broker is used, all the information is ultimately linked to that unique importer number. The importer of record is solely responsible for complying with customs regulations, and customs requires complete and consistent accuracy on all customs declarations with a specific focus on H.S. Classifications, valuation, country of origin, use of free trade certificates and terms of sale.  The CBSA monitors compliance through post entry audits which can be focused on one specific area such as country of origin or H.S. Classifications or it can be all encompassing such as a full verification audit. Errors that are found during an audit can be assessed a fine under the Administrative Monetary Penalty System (AMPS). Additional duties and taxes and interest may also be assessed and ultimately, import privileges can be revoked. The CBSA issues a Priority List in January and July of each year which identifies specific goods that are being targeted for audit however, an importer’s records can be audited at any time whether they are on the priority list or not.

Things to Consider When Using Multiple Customs Brokers:

  1. Using multiple customs brokers increases the risk of inconsistent customs declarations as different customs brokers may apply different H.S. classifications to the same products.
  2. In addition, not all customs brokers have the same business practices. Courier brokers and freight forwarder brokers have a priority to move shipments as quickly and efficiently as possible which can result in less attention given to the integrity of the information on the customs declaration.

The Best Thing An Importer Can Do:

With the stringent requirements of the Customs regulations, and the implications of non-compliance, an importer’s best option is to align themselves with one customs broker who maintains a focused priority on compliance.  A customs broker who is an international trade professional will partner with an importer to ensure that proper H.S. classifications are used consistently, and valuation and terms of sale are correct. In addition, country of origin declarations and proper use of free trade agreements are not only requirements of the customs regulations, but can provide a cost savings to the importer in terms of duty relief. A compliance broker will also provide assistance with other government agency reporting requirements.

Establish a relationship with one customs broker who will partner with you on your international trade and you can successfully bring the global market to Canada. Speak with one of our Trade Advisors today to learn how Pacific Customs Brokers’ trade advisory services can help your business.

Pacific Customs Brokers specializes in Canadian and U.S. customs brokerage. We welcome your questions on this topic in our comments section below. If you are importing or exporting goods into Canada or the USA and need assistance, please contact us.

Do you use multiple customs brokers? What has your experience been?  Share them in our comments section below or email us at Ask Your Broker.

 
 

PARS and ACI – Understanding the Border Crossing Process


PARS and ACI

 

Understanding the Pre-arrival Review System

The Pre-arrival Review System (PARS) allows customs brokers to submit shipment release information (provided by the importer and carrier) to the Canada Border Services Agency (CBSA) for review and processing before the goods arrive in Canada. This speeds up the shipment release or referral for examination process for when the carrier arrives with the freight at the border. In order for the system to be successful, all trade chain partners need to do their part.

At Shipment Pickup

The carrier’s role is vital to the PARS process. At the time the freight is picked up from the shipper, the carrier will affix a PARS sticker/label to the commercial documents and forward them to the customs broker so they can set up the shipment with the CBSA, in advance.

The PARS sticker/label

The PARS sticker/label is made up of your carrier code and combined with a unique shipment number. This “PARS” or Cargo Control Number (CCN) is critical because it identifies both the carrier and the shipment to the CBSA at the time of reporting and when release documents are presented.

When faxing, or emailing commercial documents to the customs broker the carrier must advise them of

  • The port of crossing
  • The estimated date and time of arrival
  • The carrier’s contact information – in case the customs broker needs to reach you
TIP:
Providing the customs broker and CBSA sufficient processing time will prevent a carrier or their drivers from being delayed at the border. It also allows the customs broker time to reach out to other trade chain partners if additional information is required.

Before heading to the Canadian border

Under the PARS process, the customs broker will submit the release information to the CBSA either electronically or in paper format — depending on the release requirements for the goods being shipped. Goods that require permits, licenses or certificates will require additional processing time using PARS.

ACI eManifest

With the advent of ACI eManifest making the transmission of pre-arrival conveyance and cargo data mandatory, effective January 11, 2016, carriers now have one more obligation to fulfill prior to heading to the border.

It is important to note that while the customs clearance process and ACI eManifest are closely linked, they are two separate and distinct things. In other words, you cannot just send all of your information to the customs broker and expect that they will set up your PARS for clearance and file your emanifest. Conversely, you cannot send that same data to your eManifest service provider and expect that they will file your eManifest and set up your PARS. The exception to this rule would be in situations where the customs broker clearing the shipment is also an emanifest service provider as is the case with Pacific Customs Brokers and its eManifest filing service, Border Pro.

TIP:
Always verify that the shipment has been set up and that you are good to proceed to the border. You can verify the status of your shipment by calling the customs broker directly or by using their online PARS lookup tool.

At the Canadian border:

When you or your driver arrive at the Customs booth, the Customs officer checks all the commercial paperwork presented, and uses the bar-coded cargo control number on the PARS stickers to get access to the recommendation and also to determine whether or not the shipment can be released.

TIP:
It is important for carriers to remember that the best way to ensure a smooth and seamless border crossing is to get all paperwork for both the customs clearance and eManifest sent as soon as possible. The more time that the broker has to review documentation, the better the chances are that your shipment will be in “accepted” status when you arrive and your truck will roll right through.

 

Did You Know?

Pacific Customs Brokers’ Border Pro for Carriers service was created to help carriers, truckers, drivers, dispatchers and self-carrying importers seamlessly clear customs while saving time and money. Border Pro for Carriers eManifest filing services can assist you in submitting all relevant information to Canada Customs within the required time period to ensure your trucks cross the border as quickly and efficiently as possible.

What has your experience been crossing the Canadian border?  Share them in our comments section below or email us at Ask Your Broker.