How to Become an Importer of Record in the USA
If you want to import goods into the USA, you need to know how to become an importer of record (IOR). An IOR is the person or entity that is responsible for ensuring compliance with all the laws and regulations related to importing, paying the duties and fees, and providing the necessary documentation to the customs authorities. In this article, we will explain what an IOR is, why it is important, and how you can become one.
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What is an Importer of Record?
According to the U.S. Customs and Border Protection (CBP), an IOR is “the owner or purchaser of the goods, or when designated by the owner, purchaser, or consignee, a licensed customs broker” . An IOR can be the shipper, the receiver, or a third party, depending on the terms of the shipment. For example, under Incoterms such as EXW, FCA, FAS, and FOB, the buyer or consignee is usually the IOR, while under terms like DDP, DAP, and DPU, the seller is usually the IOR . An IOR can also hire a licensed customs broker to act on their behalf and handle the customs clearance process.
Why is an Importer of Record Important?
Being an IOR is important because it entails a lot of responsibilities and liabilities for the imported goods. An IOR must:
- Obtain an active U.S. Importer of Record number in one of the following formats: U.S. Social Security Number, Internal Revenue Service assigned ID(s), or CBP assigned Importer ID.
- Obtain a valid continuous import bond registered with CBP and operate a business office staffed in the U.S. or Canada.
- Designate a company officer that will be the primary cargo security officer responsible for CTPAT (Customs Trade Partnership Against Terrorism), a voluntary program that aims to enhance supply chain security.
- Sign the “CTPAT-Partner Agreement to Voluntarily Participate” and demonstrate commitment to the obligations outlined in this agreement.
- Complete a supply chain security profile in the CTPAT Portal, identifying how the company meets and maintains the minimum security criteria for U.S. importers.
- Ensure that the goods are properly classified, valued, marked, and labeled according to the Harmonized Tariff Schedule of the United States (HTSUS) and other relevant regulations.
- File an entry summary with CBP within 15 calendar days of entry or before liquidation (final determination of duties).
- Pay any applicable duties, taxes, fees, and penalties within 10 working days of entry.
- Keep accurate and complete records of all import transactions for at least five years from the date of entry.
- Respond to any requests for information or audits from CBP or other government agencies.
How to Become an Importer of Record?
To become an IOR, you need to follow these steps:
- Obtain an Employer Identification Number (EIN) from the IRS if you are a business entity or a Social Security Number (SSN) if you are an individual. You can apply for an EIN online at https://www.irs.gov/businesses/small-businesses-self-employed/apply-for-an-employer-identification-number-ein-online.
- Register with CBP through the Automated Commercial Environment (ACE) Secure Data Portal at https://ace.cbp.dhs.gov/. You will need to create an account and provide your EIN or SSN, contact information, business information, and import activity information.
- Apply for a continuous import bond through a surety company or a customs broker. A continuous bond covers multiple entries of goods over a 12-month period and has a minimum value of $50,000 or 10% of the total duties paid in the previous year, whichever is higher . You can find a list of approved surety companies at https://www.fiscal.treasury.gov/surety-bonds/list-certified-companies.html.
- Obtain a power of attorney from your supplier or consignee if you are acting as a third-party IOR or hire a customs broker to act as your agent. A power of attorney is a legal document that authorizes you to act on behalf of another party in customs matters. You can find a sample power of attorney form at https://www.cbp.gov/sites/default/files/assets/documents/2020 Mar/CBP%20Form%207515_0.pdf.
- File an entry summary with CBP through ACE or through your customs broker. You will need to provide information such as the importer number, entry type, entry date, port of entry, country of origin, HTSUS number, value, quantity, and weight of the goods, as well as any applicable duties, taxes, fees, and other charges .
- Pay the duties and fees to CBP through ACE or through your customs broker. You can pay by electronic funds transfer (EFT), Automated Clearing House (ACH), or credit card .
- Receive the release of your goods from CBP after they have been inspected and cleared. You may also need to comply with other government agencies’ requirements depending on the type of goods you are importing, such as the Food and Drug Administration (FDA), the Environmental Protection Agency (EPA), or the Department of Agriculture (USDA) .
The Rise of the Importer of Record Industry in the USA
The United States is one of the largest and most diverse markets in the world, attracting millions of importers from different countries and regions. According to the U.S. Census Bureau, the total value of U.S. imports in 2020 was $2.8 trillion, a decrease of 9.5% from 2019. This decline was mainly due to the impact of the COVID-19 pandemic on global trade and demand. However, as the economy recovers and vaccination rates increase, U.S. imports are expected to grow again in 2021 and beyond.
One of the key factors that influences the success of importing goods into the U.S. is the role of the importer of record (IOR). An IOR is an individual or entity that assumes legal responsibility for ensuring compliance with all importing laws and regulations, paying duties, tariffs, and fees, and securing imported goods until they reach their final destination. Depending on the terms of trade, the IOR can be the buyer, the seller, or a third party such as a customs broker or a freight forwarder.
The IOR industry in the U.S. has been growing steadily in recent years, as more businesses and individuals seek to take advantage of the opportunities and challenges presented by international trade. According to a report by Flash Global, a leading provider of IOR services, the global IOR market size was estimated at $12 billion in 2019 and is projected to reach $20 billion by 2025, with a compound annual growth rate (CAGR) of 9%. The U.S. is one of the major drivers of this growth, as it accounts for about 25% of the global IOR market share.
The Benefits and Challenges of Being an Importer of Record in the USA
Being an IOR in the U.S. can offer many benefits for importers, such as:
- Access to a large and diverse market with high consumer demand and purchasing power
- Ability to leverage free trade agreements (FTAs) and preferential trade programs (PTPs) that reduce or eliminate duties and tariffs on certain products from eligible countries
- Flexibility to choose the best supplier, mode of transportation, and delivery terms for each shipment
- Control over the quality, quantity, and timing of imported goods
- Protection from liability and risks associated with non-compliance or fraud by other parties involved in the import process
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However, being an IOR in the U.S. also comes with many challenges, such as:
- Compliance with complex and changing customs laws and regulations at the federal, state, and local levels
- Obtaining and maintaining an active importer of record number (IORN), a valid continuous import bond, and other required documents and licenses
- Classification, valuation, and declaration of imported goods according to the Harmonized Tariff Schedule (HTS) and other relevant criteria
- Payment of duties, tariffs, fees, taxes, and penalties associated with imported goods
- Recordkeeping and reporting of all import transactions for at least five years
- Cooperation with customs authorities during inspections, audits, investigations, or disputes
How to Choose an Importer of Record Service Provider in the USA
Given the benefits and challenges of being an IOR in the U.S., many importers opt to hire a professional service provider to act as their IOR on their behalf. This can save time, money, and hassle for importers who do not have the expertise, resources, or presence to handle all aspects of importing goods into the U.S.
However, not all IOR service providers are created equal. When choosing an IOR service provider in the U.S., importers should consider several factors, such as:
- Experience: The service provider should have extensive knowledge and experience in handling imports into the U.S., especially for the products, countries, and modes of transportation involved.
- Reputation: The service provider should have a good reputation in the industry and among its clients, as well as a clean record with customs authorities.
- Reliability: The service provider should be able to deliver consistent and timely results for each shipment, regardless of any unforeseen circumstances or challenges.
- Communication: The service provider should communicate clearly and effectively with importers throughout the import process, providing updates, feedback, and solutions as needed.
- Cost: The service provider should offer competitive and transparent pricing for its services, without any hidden fees or charges.
Some examples of reputable IOR service providers in the U.S. are:
- USA Customs Clearance: A licensed customs broker that offers comprehensive IOR services for importers of all sizes and industries.
- InterlogUSA: A full-service logistics company that provides IOR services along with freight forwarding, warehousing, distribution, and consulting.
- Clearit USA: A modern customs brokerage that offers online IOR services with fast turnaround times and low fees.
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