Classifying Correctly for Customs Clearance: Part III -Common Clearance Crises for Importers

So, you’re new to the world of importing items for sale in the US. You might not be familiar with customs clearance, customs brokers, or the fact that customs agents do more than just check your passport at the airport. Now, you are responsible for accurately representing and paying taxes on items entering the US market. Here’s a shortlist of common compliance errors:

Top 5 Compliance Issues:

1. Valuation: If the cost of goods sold in the US is higher than stated, it is considered fraud. Your invoice must match what you declare.

2. Classification: Every item has a specific definition and tariff. This can benefit importers, as a more precise classification might be cheaper than the initial one found in the HTS.

3. Quantity: Discrepancies between stated quantities and what is found in a container will compel you to report differently if Customs discovers it.

4. Country of Origin: The export country is not necessarily where the goods were produced. Accurate information is required for correct taxation.

5. Recordkeeping: The ACE system stores information from previous entry packets for up to 5 years, providing a good line of defense for importers.

The silver lining is that penalties based on lapses in reasonable care are scaled to the size of your company. A small business run by a couple will not face the same penalty as a multinational enterprise.

As the “importer of record,” you must exercise reasonable care and confirm the information on the documentation of items entering the country. If this is challenging, you may need to hire a broker (like All Borders Inc or message us on LinkedIn) or refrain from importing. A customs broker can handle the more burdensome filing tasks, but the onus of honesty ultimately lies with the importer.