Updated: Jan 26, 2020
All American people will never forget the horrific September 11 terrorist attacks, but not many people do not know at that time, the customs brokerage firm who cleans this ocean cargo shipment never make verification with ultimate consignee nor the importer of record. Apparently, the provided commercial document contains false information and misclassified goods, but it was not being caught by the broker. In addition, the regulation regarding the control of goods into the United States is not very strict. After the 911 attacks, U.S Customs starts to take action to enforce border security. And that is why in today's global supply chain operation, U.S customs regulations and provisions are more complicated than ever. They also require more data inputs to ensure the capability to track down the shipment and maximize their control of all commercial cargos
If you do not have an entity or presence in the United States, and you want to import goods into the U.S under DDP terms ( Duty Delivery paid), you need to be established as a Foreign Importer of Record. And U.S Customs would like to know more about foreign importer of record because foreign importer has higher risk than U.S importer in terms of identity verification issue. Let us see what needs to take to your next DDP shipment
Completing a Foreign Importer of Record Power of Attorney
Customs Power of Attorney, signed by two officers of the company. Your broker will provide this document to you. Typically Powers of Attorney only need one signature, but in this case, the second signatory would essentially verify the identity and authority of the first officer. The signed officials need to hold significant positions in the company and hold corresponding responsibilities to represent the company, such as CEO, CFO, COO, Treasury secretary, etc.
Please refer to my previous blog post about Power of Attorney here
Obtaining CAN (Customs Assigned Number) thought 5106 Form Completion
Customs Assigned Number is a unique 11 digit number issued to foreign businesses or individuals, bases on the fact that no IRS employer identification number or SSN exists for the requester. If this is your shipper's first time to import goods under DDP, 5106 form is a must document to complete in order to obtain the identification number for all future CBP transactions.
Since the foreign importer has no U.S registered company IRS EIN# number nor officers' SSN, it is mandatory to input the company officers' passport information ( passport number, country of issuance, passport expiration date, and passport type), on file. If there are suspicious terrorist activities going on with this foreign importer, U.S customs would be able to track down the direct company representative by passport number.
I would recommend the brokerage firm to ask for a photocopy of the officer's passport as a cross-reference check.
Some people may transfer to another brokerage firm and in need to provide their CAN to the new brokerage firm. Where can you find your existing CAN if you forget it? In your previous 7501 entry summary block 23
Getting a Custom Bond using Your CAN ( Customs Assigned Number)
This would be a common practice for all importers. You can either choose an annual bond or single entry bond through your broker. please refer to my previous blog article here
Nominating Your Ultimate Consignee
Since the 911 attacks, the government has been trying to identify who is getting what for import and export. One of the gray areas has been when an importer brings in goods from foreign origin and automatically drops the freight at their customer's door, or another company location. Therefore U.S custom is requesting the name, address and IRS number of the Ultimate Consignee/ receiving place. This way U.S. Customs can track shipments to the actual company/warehouse receiving the freight.
Ultimate consignee does not have to worry too much about reporting EIN# or Personal SSN# ( If it is personal effects). In DDP shipment, foreign importer of record is the party responsible for duty and tax payment and all the compliance legal issues door to door. As long as the ultimate consignee does not willingly participate in territories activities in this shipment, there would not be any problem.
Even if you elect a warehouse as receiving place of the import goods, you still need to provide the Tax ID# of this warehouse. If you drop ship to Amazon fulfillment center, you can write an email to firstname.lastname@example.org in advance of shipping any inventory to obtain the EIN or Tax ID # required for customs clearance.
Any comments or thoughts? Let us chat.