Anybody who engages in cross-border trade has to comply with many regulations. In the US, an Importer of Record (IOR) is the person or entity who is responsible for ensuring compliance with all the laws and regulations while importing goods. However, many businesses fail to understand how an IOR could affect their supply chain. In this blog, we explain everything you need to know about an Importer of Record.
- Defining an Importer of Record (IOR)As mentioned above, an Importer of Record is a person responsible to ensure compliance with the regulations set by US Customs and Border Protection (CBP), filing of all relevant documents, payment of all relevant taxes and duties & other fees, classification of products, and other obligations for importing goods into the country. The CPB had created this role for security reasons and to assure proper payment of tariffs on all imported goods.
- Who Can Be the Importer of Record?An importer of record (IOR) can be an individual or an entity, explained as follows:Owner or Purchaser/Buyer of Goods
Any party with a financial interest in the goods being imported is the owner or purchaser. They can be a buying or selling agent, or someone who imports a consignment. An owner or purchaser can complete the entry documentation on their own and be the Importer of Record.
In case an owner or purchaser plans to make a Customs broker the Importer of Record on their behalf, then the former must then grant the latter the Power of Attorney (POA) to get authorization for carrying out the clearance process for them. However, even if the responsibility of being an IOR is given to the customs broker, the ultimate responsibility for the accuracy of the documents presented before the CBP lies on the owner or purchaser.
Sometimes, the purchaser consigns the goods to a person or entity such as freight forwarders, Carrier lines, etc. to import them into the US, making such consignee the Importer of Record. As the goods enter the US, the consignment ends and the buyer then reasserts full ownership on them.
In some cases, there are buyers who don’t take ownership of the goods until after they enter the US. In such cases, only the seller or supplier from the other country, who is the legal owner of the goods at the time of entry into the US, can be the IOR.
- Responsibilities of the Importer of RecordThere are many crucial responsibilities of an Importer of Record. With so many essential tasks to be completed, it’s imperative that an IOR has full knowledge of all that needs to be done. Here’s a list of all the responsibilities of an Importer of Record:
- Assessment of payment of duties on imports based on exact shipment value
- Proper Classification of goods(into HTS codes)being imported
- Check if the trade is covered under any Free Trade Agreement and ensure proper tariffs being levied
- Payment of tariffs and duties on imported goods
- Clearly declare the country of origin of the goods in the shipment
- Ensure shipment matches laws and standards of the US
- Ensure appropriate documentation as required by the CPB, including filing the Border Protection Form 7501: the Entry Summary
- Ensure compliance with all the licenses, certificates, authorizations needed by agencies like FDA (Food and Drug Administration), EPA, (the United States Environmental Protection Agency), etc. for importing goods
- Accountability of goods at the time of import
- Appoint a Power of Attorney (POA), should the IOR cannot be on-site at the time of importation
- How an IOR can Benefit your Business
There is a lot of documentation involved in importing and exporting goods, globally and an Importer of Record can ensure that all the rules and regulations of a specific country are followed properly. Here are some benefits of having an IOR for your global trade transactions:
– Avoid penalties for not following CBP rules and regulations properly
– Local resources who have extensive knowledge of all the rules and can operate on the ground, providing ease of transactions
– Tracking the export/import process of your goods
– Simplify and fasten customs clearance process
– You can focus on your core business activities without worrying about costly delays
- The role of IOR service providers IOR service providers are companies that provide services regarding the import of goods – including but not limited to – acting as the Importer of Record, filing of relevant documents, payments of duties and tariffs, and arranging for customs clearance.The IOR service provider you choose should be experts and have wealth of knowledge about the goods you’re going to import/export and should also be able to provide additional logistics services you may need. Ideally an IOR service provider shall:
- Advice on whether you require an IOR service or not in the first place
- Compile a list of requirements for a successful import – documents needed, etc
- Help you with managing all logistics and customs brokerage services to execute a successful import
- Enforced Compliance by CBPAn Importer of Record could be subjected to enforced compliance by the CBP. Enforced compliance can include inspections and examinations of imports, audits of documentation, civil penalties, etc.There have been cases when government agencies have gone beyond the Importer of Record and denied entry of imports into the US. In this case, CBP may oversee the export of goods back to its origin country or the destruction of such goods.
In the end
Having an IOR for your business means that you have a powerful partner at each step of your shipment process. While all the documentation and clearance process can be done yourself, there is no harm in taking the help of the experts for better reliability. To know more about global trade and how you can use global trade data intelligence to grow your business,