While US Customs regulations require customs brokers like Laufer to meet significant documentation requirements, U.S. Importers face their own specific regulations, and have substantial record keeping obligations. If an importer did not keep or cannot locate the information Customs or a Partner Government Agency (PGA) is asking for, it could be a costly mistake.
What documents should companies retain from their import transactions? To really be on the safe side, all of them! This post shares which documents you will most often be asked for or are most critical to keep on hand.
Record Keeping Requirements
There are actual US Customs regulations around record-keeping for both customs brokers and importers. Customs brokers are required to keep all relevant and required documents for five years. There are some instances where documents must be kept for as long as Customs has the entry open. One example is any documentation from imported products subject to anti-dumping/countervailing duties. Those documents should be kept on hand indefinitely because entries subject to anti-dumping/countervailing technically remain open as long as the case is open.
We often hear, “Well, if my broker is maintaining my documents for five years, I don't need to keep my records or have my own record-keeping system.” Under US Customs regluations, and further detailed under CBP’s Record Keeping Informed Compliance publication, importers are required to maintain their own copies. So, even though CBP’s broker regulation is for Customs Brokers to maintain documents for five years, this does not waive the fact that the importers are also required to retain their own documents.
Recently there have been several examples where forwarders and brokers have temporarily or permanently lost access to their systems and records because of cyber-attack or other systems failures. What would happen if your broker lost all your paperwork (electronic and or paper)? If Customs comes to an importer asking for five entry packets, the importer cannot simply respond that their broker’s records were wiped, and they do not have any of the required documents. It is much easier – and more compliant – for importers to have a process that includes a naming convention and operating procedures to find documents within their own record keeping system. The ability to quickly locate and access these records is critical as Customs does not give an unlimited timeframe to respond. Their nomenclature is, "within a reasonable period of time," and this is typically around two weeks/ten business days. There can be significant penalties for the broker and importer for failure to produce the requested documents.
What Documents should be kept?
At minimum, retain all commercial documentation required and presented for US Customs entries.
- Commercial Invoice
- Packing List
- Bill of Lading/Airwaybill
- Arrival Notice
- Any communications regarding presenting and receiving these documents to the importer’s customs broker and US Customs
- Any documentation and communication that clarifies such as country of origin,
- Any certifications documents or permits required for participating government agencies (PGA’s).
While this is not intended to be an all-inclusive list, it is important for an importer to always keep everything that they send to their Customs Broker, and that they should have records of everything they need to provide to Customs, similar to the process of providing and retaining all the information supporting a tax return when it comes to documenting deductions, etcetera.
Additional Information to Retain
Financial Records and Supply Chain Custody
An importer should be able to substantiate the manufacturing activity of their goods back to the country of origin and actual manufacturer. One thing that often catches importers off guard is the retention of all the financial records corresponding to their imports. So, if an importer indicates XYZ Company is their manufacturer and are in this region or this country of the world, yet the payment receipt does not line up with that, Customs will ask the importer to verify they are truly paying this manufacturer for certain goods. Customs must be able to line everything up, including the financial piece of the transactions. This is not something that will be readily available, especially if an importer has been relying on their broker to maintain their records. Customs Brokers typically do not have any of that kind of information to begin with, and certainly do not keep those records.
All records should be kept on how an importer chose a particular tariff classification for their imported products. Ideally, an importer has created and is routinely maintaining an HTS (Harmonized Tariff Schedule) product code database. That is something that Customs expects importers to maintain and keep up to date, and an area which many importers, too often, put that onus on their broker. If an importer is making any classification changes to an existing product, or something is in question (such as goods under review or exam), having backup documentation showing how the classification was chosen, if any third parties provided advice or paid consulting, proof of a binding ruling, and other supporting information is extremely helpful.
Licensing and "Assists”
If an importer has purchased licensing any documentation and record of that licensing transaction should be retained.
Customs defines an “Assist” as something that is “supplied directly or indirectly, and free of charge or at reduced cost, by the buyer of imported merchandise for use in connection with the production or the sale for export to the United States of the merchandise.” Examples include:
- Materials, components, parts, and similar items incorporated in the imported merchandise.
- Tools, dies, molds, and similar items used in the production of the imported merchandise.
- Merchandise consumed in the production of the imported merchandise.
- Engineering, development, artwork, design work, and plans and sketches that are undertaken elsewhere than in the United States and are necessary for the production of the imported merchandise.
All documentation involving any “assist” provided to the manufacturer or supplier should be retained and shared with the importer’s Customs Broker. Recognizing and declaring the value of an “assist” is often missed by an importer.
In summary, an importer should keep anything they are sending to their broker for Customs clearance.
Top “7” Must Haves
- Commercial Invoice
- Packing List,
- Bill of Lading or Airwaybill
- Certificates of Origin and/or other certificates and permits.
- Customs form 7501
- Other records: Assists/First Sale, POA (Power of Attorney), and Financial Records
- HTS (Harmonized Tariff Schedule) Product Database Communication and written responses from US Customs, Other Government Agencies, and your Customs Broker.
If you have concerns about your record-keeping program and/or documentation, address them now before it is too late. US Customs will not hesitate to inflict both monetary penalties and legal action in response to anything it views as improper trade practices.
Contact Laufer to discuss how we can help you to better understand and comply with US Customs import record-keeping regulations.