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.

 

 

 
 

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.

 
 

How To Break Into The Global Export Market


The Global Export Market

 

With the signing of recent trade agreements, global trade activity is turning a very significant corner. There is an improved climate for international trade and Canadian exporters are positioned to benefit. Exporting outside of Canada is an excellent way to grow your business.

 

Did you know?

  • International trade represents more than 60 percent of Canada’s GDP.
  • One in five jobs in Canada is linked to exports.
  • There would be 3.3 million fewer jobs without international trade.
  • Canada’s unemployment rate would skyrocket to more than 25 percent without exports.

(Source: Global Affairs Canada)
 

If overseas sales are currently, or shortly will be, part of your business plans, how do you approach the daunting task of breaking into the export market?

Part of a winning formula should include professional business services.  International marketers, bankers and freight forwarders play an important role and their experience and expertise will be very valuable.  Their knowledge will guide the development of your business plan and, when the plan takes shape and begins to unfold, you will need their guidance and involvement when the goods begin to physically move to the foreign markets.  Ultimately, your goal is to acquire regular ongoing business to make your efforts worthwhile.  Your careful choice of field experts will help make this happen.

Export Consultation Services

Pacific Customs Brokers can help you open the door to export opportunities. Speak to one of our trade advisors who will assist and advise you as your independent consultant.

 

Increasing your company’s knowledge base will also be necessary.  Foreign cultures, market studies, intellectual property rights, financing, terms of sale, international shipping, and export and import processes are just a few that come to mind.  When it comes to deciding who should be involved, you will be surprised to find that export sales touch almost every department – sales and marketing, accounting, legal, purchasing, production, etc.  Success means bringing everyone on board to buy into the plan. New or aspiring exporters may want to attend a trade compliance session to increase their education in these areas.

Global Export Seminar

As a Canadian exporter, if you are shipping beyond the U.S. and into the global market, Global Export Seminar will cover key topics. In this seminar you will gain a better understanding of free trade agreements, regulations and how to prepare the documentation for export. We will provide you with a solid foundation of reporting, record-keeping requirements and terms of sale.

Register for an upcoming seminar today!

 

Do you have questions on global export? Have you had experience breaking into the global export market? Share your thoughts in the comments section below or email us at Ask Your Broker.

 
 

How to Avoid ACI eManifest Penalties Triggered by Voluntary Entries


Ban-600Large fines of up to $8,000 per shipment can occur for carriers not in compliance with the Canada Border Services Agency (CBSA). With the introduction of monetary fines in January 2016, compliance is more important than ever. CBSA may issue penalties for submissions that are not complete, inaccurate, or intentionally false. In addition there are strict time frames for transmitting the required information which if not adhered to can result in fines.

 

Who is responsible for providing cargo and conveyance  pre-arrival data?

Carriers are liable to ensure all information provided to the CBSA including pre-arrival information is true, accurate and complete. The operator of the conveyance  that transports the goods to Canada is solely liable for providing all cargo and conveyance  pre-arrival information via electronic means to CBSA.

 

Where business arrangements exist, another carrier may provide the pre-arrival cargo data to CBSA; however, it is the conveyance operating carrier that remains liable for the pre-arrival cargo and conveyance transmitted to CBSA.

 

The conveyance operating carrier should ensure that all cargo carried in the conveyance has been transmitted to CBSA prior to arrival. This is the time to ensure a complete compliance strategy is in place with the carrier submitting the cargo to CBSA and the transporting carrier (if different) so that there are no discrepancies which could result in penalties assessed against the transporting carrier.

 

What are the penalties?

Penalties for not submitting ACI are applied to each shipment. The penalty is $2000 per shipment for first occurrence, $4000 per shipment for second occurrence and $8000 per shipment for third and subsequent occurrences.

Carriers have been assessed this penalty also when they failed to report cargo after the fact via an amendment to the original ACI Conveyance report filed. Importers who receive goods that were delivered to them without official customs release will voluntarily declare goods  via a B3 type V entry. The submission of the voluntary entry triggers the CBSA to assess a penalty against the carrier who transported the goods into Canada because the goods were delivered to the importer without reporting the cargo to CBSA. The transporting carrier should have amended their conveyance report to CBSA to report the cargo delivered or found over after the conveyance was released at the first port of arrival into Canada. If the cargo was not reported via an amendment to the original  ACI transmission then the penalty assessed by CBSA against the transporting carrier will be upheld.

 

How a carrier can avoid penalties for not reporting cargo?

To avoid penalties for not reporting cargo, carriers should ensure that all cargo carried has been reported via ACI and accepted prior to arriving at the first port of arrival into Canada. If cargo is found after the fact, the transporting carrier should amend their report as soon as possible and before the importer submits their voluntary entry.

 

Trade Advisory Services:

Pacific Customs Brokers can review and prepare AMPS appeals. Our Trade Advisors will work with you to guide your business through the appeal process and avoid incurring further penalties.

Have questions?

If you have any questions about ACI eManifest, please do not hesitate to contact our Carrier Relations Liaison at 855.542.6644 or via email at [email protected]
We also welcome your questions and comments in our comments section below.

 
 

How to Appeal An ACI eManifest AMPS Penalty


How Highway Carriers Can Appeal An AMPS Penalty

It is important for highway carriers to ensure that they are fully compliant to all CBSA requirements for eManifest to avoid AMPS penalties. In our earlier blog post, Hefty AMPS Penalties for ACI eManifest Non-Compliance,  we broke down the various AMPS contraventions and the penalties which may be applied. A graphical representation can also be found in this Infographic: ACI eManifest AMPS Penalties in Effect. Of note is the point that the penalty for not filng ACI for the cargo carried and conveyance used to carry the cargo is also applied when cargo  is found in Canada by the carrier and/or importer. The carrier must  amend or submit the report via eManifest for this cargo immediately upon discovery regardless of the importer submitting a Voluntary entry to account for the duty and taxes on the cargo.

 

When you are issued a penalty under AMPS, you will receive a Notice of Penalty Assessment (NPA), from the CBSA describing the infraction and the penalty incurred.

Appealing a Penalty Assessment

If a highway carrier disagrees with a Notice of Penalty Assessment (NPA), you may want it reviewed. There are two types of reviews available:

1. Correction

Following the assessment of a penalty, a designated officer may, on behalf of the Minister, cancel or reduce the penalty within 90 days of its issuance if any errors in the assessment were made. Correction requests should be submitted to the issuing office. To improve access to the correction process, the fax number of the issuing offices has been added on the NPA.

The information required in a correction request is:

(a)  the client identification number:

(i) Business Number (RM import/export account level);

(ii) Carrier Code (carrier/transporter);

(iii) Sub-office Work Location (warehouse operators);

(b)  the name and address of the client;

(c)  the penalty assessment number (a unique sequential identifier assigned by the AMPS automated system to each NPA);

(d)  the proof of payment of the NPA, when applicable;

(e)  an explanatory note, clearly identifying why the carrier believes that there is an error in the penalty assessment.

If a request for a correction is denied, the carrier still has the option of requesting a Minister’s decision as described below in the redress process.

 

2. Redress  (Minister review)

If a client disputes the assessment of a penalty, a request for a Ministerial decision can be made. The CBSA’s Recourse Directorate reviews these requests. The NPA contains information on the redress process. It is recommended that clients provide as much information as possible relating to their objection to the penalty.

Requests for a Ministerial decision must be submitted within 90 days from the day the NPA was served. In exceptional circumstances, this may be extended to one year. The requests should be sent to the CBSA Recourse Directorate, 1686 Woodward Drive, Ottawa ON K1A 0L8. The Ministerial decision will be communicated to the client in writing. If the penalty was justified by the facts and the law, the decision will confirm that the penalty assessment will be maintained and any money and/or interest owing on the account of the penalty are payable. If, on the other hand, the penalty was not justified by the facts or the law, the penalty assessment will be cancelled and any money paid on the account of the penalty will be refunded and any interest.

Further information on the correction and redress processes can be found on the CBSA website.

 

Payment

If a carrier requests a correction or redress, the payment can be deferred until a decision is rendered. However, if it is determined that there was a contravention and that the penalty was correctly issued, and the penalty is not paid within the 30 days, interest will apply and be calculated from the day after the date of the NPA being served until the date the amount owing is paid.

 

Penalty Reduction Agreement (PRA)

The CBSA has a program called the Penalty Reduction Agreement (PRA). This is a formal agreement between the CBSA and the client whereby the payment of the penalty is partially reduced by CBSA for the client to reinvest in the correction of the client’s commercial information system.

A PRA must be approved first before penalties are reduced and information on how to apply for this program is in Memorandum D22-1-2, Penalty Reinvestment Agreement (PRA) Policy. The Agreement  and reduction of penalty amounts are specific to the client’s information system (eg. purchase of software, upgrade etc) and does not apply to ongoing costs for training employees, overhead and administrative costs, renovation costs, and salaries for hiring employees conversant with the CBSA policies.

Be sure to speak with a customs professional before agreeing to participate in a penalty reduction program.

What Carriers Can Do to Avoid AMPS?

A clear understanding of ACI eManifest requirements, comprehensive compliance monitoring and record keeping system will  ensure that you avoid monetary penalties and high risk scoring.

Minimize Your Risk of AMPS

Our ACI eManifest Seminars and Webinars are 90-minute sessions where we answer questions, offer practical solutions and help with the ACI eManifest regulations in effect. For details and to register »

 

Trade Advisory Services:

Pacific Customs Brokers can review and prepare AMPS appeals. Our Trade Advisors will work with you to guide your business through the appeal process and avoid incurring further penalties.

Have questions?

If you have any questions about ACI eManifest, please do not hesitate to contact our Carrier Relations Liaison at 855.542.6644 or via email at [email protected]

We also welcome your questions and comments in our comments section below.