How do you properly declare a sample product value?
it's worth nothing - give a value of 1 dollar. Customs Broker must hear that all the time over the course of their career. Be careful importers, you have to stop doing that!
An importer's first instinct is to think that if it did not pay anything for a product, the product has no value, However, the logic here does not hold up: if a foreign friend were to offer me a car as a gift, you could not say that the car's value is 0 dollars. if your friend in China would be ready to send a box of protective equipment to a hospital as a donation, you could not say the protective mask has no value. From the CBP 's perspective, everything has value. You must assign a value for your sample shipment but it does not necessarily mean you must pay duty and fees for your sample shipment. I will cover that later
Stop declaring 1$ for your sample shipment
A declaration of 1$ has become a very common practice among importers and even some entry writers will automatically declare 1 dollar by default without checking the accuracy of this value. This kind of act is a type of fo negligible value that can lead to a substantial financial penalty during the post-entry summary review. As we know, U.S Customs has up to one year to liquidate your entry. That means, they can pull out and audit your file anytime between the date of your entry release to the date of actual liquidation. If the transaction value indicated on your commercial invoice says this sample products worth only 1 dollar but Customs do not agree. They will adapt the next method " Identical and similar merchandise " valuation method to justify the proper amount of commercial value by comparing the similar or identical products of yours in the market. If they evaluate this product worth 5000 dollars while you only declare 1 dollar, this importer may incur a penalty of duty owned of the 4999$ plus applicable interests. Ultimately, this company may face very stiff penalties
Correct Format for the sample shipment
In all these trial size sample shipments, not only must you declare and classify these items, you must assign a Customs value. The phrase: “Samples with no commercial value; value for Customs purposes only: $xxxx” is perfectly acceptable. Likewise, if you are receiving warranty merchandise at a reduced value, you also have to declare it on the commercial invoice.
Declare Value does not mean necessary equals to pay Duty
I get it. the motivation of declaring 1$ ( or 5$, 10$, you know what I mean lol) is to avoid paying high duty and fees. Actually , declaring the correct value of your non-commercial shipments does not always mean you have to pay the regular duty and fees if you are fully compliant with the U.S Customs regulation
Personal exemption under Section 321
With the limit now increased to $800 USD, the section has more value for businesses importing small, singular shipments — something that can save your business time and money. as long as your goods except alcohol and tobacco are not subject to Anti-dumping or countervailing duties or China trade war section list, your broker can declare section 321 entry to the U.S Customs, then you are qualified for the duty-free treatment from Customs. Therefore, check with your supplier if the proper value of the sample shipment worth less than 800 dollars to help you entitle the section 321 program.
Any samples are marked, torn, perforated or otherwise treated as it is not suitable for sale or use other than as a sample
Very often the sample shipper send to the buyer is indeed just to showcase the real product size, dimension, appearance, and features but it may not actually be functioned, for example, a fake phone module. In this scenario, the broker is allowed to use a special tariff provision 9811.0060 so the importers can be eligible for free duty. Remember, the actual merchandise must be marked "SAMPLE" in indelible ink or in paint or cut or torn in the manner that the product cannot be resale or use. ( The provision excludes tobacco and alcohol)
Link reference https://www.cbp.gov/sites/default/files/assets/documents/2020-Feb/icp066_3.pdf
What you always do in the past year without issue does not mean it is correct. That just means that you are not being audited yet. It is like a probability thing. A person may lie to the IRS many years without penalty. One day, when the audit comes, the person will be screwed up suddenly. Remember, declare the correct value for your sample shipment.