FAQs / Glossary
Frequently Asked Questions
What is a Licensed Customs Broker?
Licensed Customs Brokers (LCB) are private individuals, partnerships, associations or corporations licensed, regulated and empowered by U.S. Customs and Border Protection (CBP) to assist importers and exporters in meeting Federal requirements governing imports and exports. This includes, but is not limited to, partnering government agencies such as FDA, Agriculture and Fish & Wildlife. All required documents and forms must be supplied to these agencies with a Harmonized Tariff Schedule of the United States (HTSUS) classification number for each product imported. This code determines the rate of duties and taxes that must be paid to the U.S. Treasury department through U.S. Customs. With all the changing rules and regulations in cross-border transactions, it makes good business sense to use a licensed customs broker.
What is the advantage of using a Licensed Customs Broker?
A Licensed Customs Broker will help ensure that the importer is meeting the ever-changing requirements of CBP and Homeland Security. Customs and Border Protection has embarked on an aggressive method of checking compliance, targeting all importers taking advantage of free trade agreements (FTA’s), duty reductions, and other duty relief programs.
A Licensed Customs Broker will assist the importer with the increased complexity of the HTSUS and CBP regulations, enabling him or her to maintain compliance and to identify opportunities that can have a significant impact on the firm’s bottom line in reducing duties and taxes.
Hiring a Licensed Customs Broker alleviates the need for importers to employ staff with specialized customs knowledge so as to disencumber the importer to concentrate on revenue-generating core competencies.
Licensed Customs Brokers provide post-entry work that may take the form of a refund or other payment amendment request to the CBP.
Should our company use several different brokers, depending on the mode of transportation or the location of entry?
This practice is definitely NOT recommended. We recommend that a company only use a single Licensed Customs Broker, and build a rapport with an independent consultant who becomes familiar with your imported goods. Using the services of more than one broker can expose a company to potential errors and therefore a potential CBP audit. CBP views an importer as a single "account", and all shipments regardless of the Customs port of entry, mode of transportation, or carrier are applied to the account associated with the company's business.
Can Leonard Trade Consulting, LLC review my entries filed by other customs brokers to ensure compliance?
Leonard Trade Consulting, LLC can thoroughly review your previous customs entries and provide solutions and suggestions. Information required for review may include copies of your U.S. Customs Invoices, or Commercial Invoices, as well as, the supporting CBP Forms and the other customs brokers’ paperwork.
While you may have partnered with a brokerage provider with a Licensed Customs Broker on staff, it is unlikely an LCB is assigning your classifications. At Leonard Trade Consulting, LLC our Licensed Customs Broker alone assigns all classifications.
What if my current customs broker misclassifies my goods?
Leonard Trade Consulting, LLC will determine if error exists, correct any misclassification and assist you through the post entry process to either recover overpayment or file a voluntary tender for money owed for underpayment. Tariff classification is the ultimate responsibility of the Importer of Record, and it is expected by Customs that reasonable care will be used in this endeavor. There are potential consequences in reporting incorrect tariff information to Customs from not just underpayments but also overpayments of duty. Among the risks of misclassification are penalties, fines, further scrutiny and delays of shipments, and the possibility of full Customs audits. The experts at Leonard Trade Consulting, LLC are pleased to assist you in the proper classification of your goods when the necessary information is given regarding the product.
The following questions are in part taken from the Reasonable Care Checklist for Compliance issued by CBP in their effort to provide guidance and information to the trade community.
The questions below are not exhaustive or encyclopedic - ordinarily, every import transaction is different. For the same reason, it cannot be overemphasized that although the following information is provided to promote enhanced compliance with the Customs laws and regulations, it has no legal, binding or precedential effect on U.S. Customs and Border Protection or the importing community. U.S. Customs and Border Protection believes that the following information may be helpful to the importing community and hopes that this document will facilitate and encourage importers to develop their own unique compliance measurement plans, reliable procedures and reasonable care programs.
As a final reminder, it should be noted that to further assist the importing community, U.S. Customs and Border Protection issues rulings and informed compliance publications on a variety of technical subjects and processes. It is strongly recommended that importers always make sure that they are using the latest versions of these publications.
GENERAL QUESTIONS FOR ALL TRANSACTIONS:
- If you have not retained an expert to assist you in complying with Customs requirements, do you have access to the Customs Regulations (Title 19 of the Code of Federal Regulations), the Harmonized Tariff Schedule of the United States, and the GPO publication Customs Bulletin and Decisions? Do you have access to the Customs Internet Website, Customs Bulletin Board or other research service to permit you to establish reliable procedures and facilitate compliance with Customs laws and regulations?
QUESTIONS ARRANGED BY TOPIC:
Merchandise Description & Tariff Classification
Basic Question: Do you know or have you established a reliable procedure or program to ensure that you know what you ordered, where it was made and what it is made of?
- Have you provided or established reliable procedures to ensure you provide a complete and accurate description of your merchandise to U.S. Customs and Border Protection in accordance with 19 U.S.C. 1481? (Also, see 19 CFR 141.87 and 19 CFR 141.89 for special merchandise description requirements.)
- Have you provided or established reliable procedures to ensure you provide a correct tariff classification of your merchandise to U.S. Customs and Border Protection in accordance with 19 U.S.C. 1484?
- Have you consulted the tariff schedules, Customs informed compliance publications, court cases and/or Customs rulings to assist you in describing and classifying the merchandise?
- Is the nature of your merchandise such that a laboratory analysis or other specialized procedure is suggested to assist in proper description and classification?
- Have you consulted with a Customs "expert" (e.g., lawyer, Customs broker, accountant, or Customs consultant) to assist in the description and/or classification of the merchandise?
Basic Questions: Do you know or have you established reliable procedures to know the price actually paid or payable for your merchandise? Do you know the terms of sale; whether there will be rebates, tie-ins, indirect costs, additional payments; whether assists were provided, commissions or royalties paid? Are amounts actual or estimated? Are you and the supplier related parties?
- Have you provided or established reliable procedures to provide U.S. Customs and Border Protection with a proper declared value for your merchandise in accordance with 19 U.S.C. 1484 and 19 U.S.C. 1401a?
- Have you consulted the Customs valuation laws and regulations, Customs Valuation Encyclopedia, Customs informed compliance publications, court cases and Customs rulings to assist you in valuing merchandise?
- Have you taken measures or established reliable procedures to ensure that all of the legally required costs or payments associated with the imported merchandise have been reported to U.S. Customs and Border Protection (e.g., assists, all commissions, indirect payments or rebates, royalties, etc.)?
- Have you consulted with a Customs "expert" (e.g., lawyer, accountant, Customs broker, Customs consultant) to assist in the valuation of the merchandise?
Country of Origin/Marking/Quota
Basic Question: Have you taken reliable measures to ascertain the correct country of origin for the imported merchandise?
- Have you established reliable procedures to ensure that you report the correct country of origin on Customs entry documents?
- Have you established reliable procedures to verify or ensure that the merchandise is properly marked upon entry with the correct country of origin (if required) in accordance with 19 U.S.C. 1304 and any other applicable special marking requirement (watches, gold, textile labeling, etc)?
- If you are importing textiles or apparel, have you developed reliable procedures to ensure that you have ascertained the correct country of origin in accordance with 19 U.S.C. 3592 (Section 334, Pub. Law 103-465)?
- Have you consulted with a Customs "expert" (e.g., lawyer, accountant, Customs broker, Customs consultant) regarding the correct country of origin/proper marking of your merchandise?
Intellectual Property Rights
Basic Question: Have you determined or established a reliable procedure to permit you to determine whether your merchandise or its packaging bear or use any trademarks or copyrighted matter or are patented and, if so, that you have a legal right to import those items into, and/or use those items in, the U.S.?
- If you are importing goods or packaging bearing a trademark registered in the U.S., have you checked or established a reliable procedure to ensure that it is genuine and not restricted from importation under the gray-market or parallel import requirements of U.S. law (see 19 CFR 133.21), or that you have permission from the trademark holder to import such merchandise?
- Have you taken measures or developed reliable procedures to ensure that your merchandise complies with other agency requirements (e.g., FDA, EPA/DOT, CPSC, FTC, Agriculture, etc.) prior to or upon entry, including the procurement of any necessary licenses or permits?
- Have you taken measures or developed reliable procedures to check to see if your goods are subject to a Commerce Department dumping or countervailing duty investigation or determination, and if so, have you complied or developed reliable procedures to ensure compliance with Customs reporting requirements upon entry (e.g., 19 CFR 141.61)?
CBP - U.S. Customs and Border Protection (CBP) is the largest federal law enforcement agency of the United States Department of Homeland Security. It is charged with regulating and facilitating international trade, collecting import duties, and enforcing U.S. regulations, including trade, customs, and immigration.
Classification - Also known as an HTS number or tariff number. This 10-digit code in a country’s Customs tariff schedule is used to levy duties, enforce laws and restraints, to assess risk and to do statistical analysis.
Compliance - Acting in accordance with the rules & regulations of U. S. Customs and all partner government agencies (example of Partner Government Agencies: FDA, FWS, etc.)
Customs Broker - Private individuals, partnerships, associations or corporations licensed, regulated and empowered by U.S. Customs and Border Protection (CBP) to assist importers and exporters in meeting Federal requirements governing imports and exports. Brokers must have expertise in the entry procedures, admissibility requirements, classification, valuation, and the rates of duty and applicable taxes and fees for imported merchandise.
Customs Modernization Act of 1993 - Legislation passed in the US that fundamentally altered the relationship between importers and U.S. Customs and Border Protection by shifting to the importer the legal responsibility for declaring the value, classification, and rate of duty applicable to entered merchandise. “Reasonable Care” was born from this act.
Customs Ruling - Binding administrative decisions issued by U.S. Customs and Border Protection (CBP) which may address customs related matters, including United States tariff classification, marking, and valuation.
ELC - Estimated Landed Cost - the total price of a product once it has arrived at a buyer's door. The landed cost includes the purchase price of the product, all transportation fees (both inland and ocean), customs, duties, taxes, insurance, currency conversion, crating, handling and payment fees.
Focused Assessment - A detailed audit by U.S. Customs of an importer's internal controls for Customs transactions together with selected import transactions.
Free Trade Agreement (FTA) - Cooperation between at least two countries to reduce trade barriers (import quotas and tariffs) and to increase trade of goods and services with each other.
FTA Eligibility - The determination as to whether or not a product is eligible for a reduced duty rate per the terms and conditions of the Free Trade Agreement (FTA).
Importer of Record - The owner or purchaser of the goods.
Liquidation - The process through which Customs completes its review of an entry and finalizes its position as to the duties.
Liquidation Date - Generally, an entry remains "unliquidated" for a period of 314 days after the date of entry. An entry is "deemed" liquidated by operation of law through Customs inaction within (1) year from the date of entry or reconciliation, unless extended.
PEA - Post Entry Amendment is the means for making corrections on entry summary data presented to and accepted by U.S. Customs and Border Protection (CBP) through the Automated Commercial System (ACS).
PSC - Post Summary Correction is the means for making electronic corrections on entry summary data presented to and accepted by U.S. Customs and Border Protection (CBP) through the Automated Commercial Environment (ACE).
Payment Terms Discount - A discount received by the purchaser if an invoice is paid within the agreed upon time frame.
Post Entry - Making corrections on entry summary data after presented to and accepted by U.S. Customs and Border Protection (CBP).
Prior Disclosure - The means by which importers may report violations of customs laws and in almost all cases avoid the imposition of monetary penalties, with the exception of the interest on the duties and fees which should have been paid at the time of interest.
Reasonable Care - As set forth in the Modernization Act of 1993, the importer of record is responsible for using Reasonable Care to enter, classify and determine the value of imported merchandise and to provide any other information necessary to enable U.S. Customs and Border Protection to properly assess duties, collect accurate statistics and determine whether other applicable legal requirements, if any, have been met. An Importer of Record’s failure to exercise such caution and concern could delay release of the merchandise and, in some cases, could result in the imposition of heavy fines and penalties. Reasonable Care Checklist for Compliance [PDF]
Tariff Schedule - The primary resource for determining tariff (Customs duties) classifications for goods imported into the United States.
Valuation - “Customs valuation" is a customs procedure applied to determine the customs value of imported goods. The customs value is essential to determine the duty to be paid on an imported good.
Voluntary Tender - a voluntary payment of customs duties on imported merchandise.
ACCREDITATIONS & AFFILIATIONS