FAQ’s – Frequently Asked Questions

Bond Premiums – Single and Continuous Bond Premiums:  Normally the premium on a Continuous Bond is $450.00 per year.  The aforementioned year is a running year, not a calendar year.  Single entry bond premiums are much more difficult to calculate as there is a minimum premium, normally $30 or $40.00 per Single Entry bond (depending upon the commodity), or $3.00 to $4.00 per thousand of value plus duty and fees that are due to Customs.  Additionally if the goods being imported are subject to other government agencies such as the Food & Drug Administration (FDA), or the Department of Transportation (D.O.T), or the Environmental Protection Agency (E.P.A.) among others bond must be calculated at three times the value plus the cost of duty and fees applicable.  Single Entry bond premiums on goods regulated by other government agencies can become very costly.  As an example, the Single Entry bond premium on a $50,000 duty free shipment of FDA regulated goods would be at a minimum of $450.  The math to calculate this premium is $50,000 X 3 = $150,000 divided by $1000 equals 150 X $3.00 = $450.00 for the single entry bond premium.  In this Single entry bond scenario the importer is better off with an annual Continuous bond.
Bonds – Single Entry or Continuous – What is a Customs Bond:  Virtually every entry or importation that comes into United States requires the posting of a “bond” with U.S. Customs.  Bonds are purchased through much like you might use for your homeowners, auto, or life insurance policies.  Please don’t confuse the posting of a Customs bond with a temporary importation bond entry, or a shipment that is put “in-bond” (such as an Immediate Transportation entry or a Transportation and Exportation entry), these are just types of entry that require the posting of a Customs bond.  A Single Entry Bond or a Continuous Bond is an “importers” bond covering the importation of merchandise being imported into the USA.  A single entry bond is good for only one importation.  Therefor if an importer chooses to utilize Single Entry bonds for their importations, one bond and one premium must be paid for each and every shipment imported into the USA.  A Continuous bond is used for importers that have multiple importations annually into the USA.  The normal rule of thumb for selecting a Continuous bond over a single entry bond is, if you will be having 15 or more importations in a years period it is always a good idea to have your U.S. Customs broker underwrite a Continuous bond on your behalf.  With either a Single Entry bond or a Continuous bond there are premiums the importer must pay to the insurance company.  These bond premiums are usually paid to the Customs broker who in turn remits the premium to the insurance company.
Invoice: A Commercial Invoice is an actual copy of the bill of sale (sales transaction) between a seller and a buyer.  In fact CBP (Customs) would prefer to have a copy of the actual “commercial invoice”, however many times additional content must be added to the commercial invoice to bring it to an acceptable format for the importer, the broker and, of course CBP.  Such additions might include:

  • Country of Origin of the goods,
  • Currency used,
  • Shipping Weight,
  • Tax number of the U.S. consignee or buyer
  • Dollar amount of any assists applicable (assists is a CBP regulatory phrase)
  • Dollar amount of any freight costs that might be included in the value
  • If duty and brokerage is prepared and included, a statement to that fact
  • Name of the U.S. Broker to notify for entry
  • Port of entry / arrival

A Pro-forma invoice can be used in lieu of the actual commercial invoice (when the commercial invoice is not available).  The pro-forma invoice needs to represent all of the facts of the commercial invoice.
Invoice: Why make an invoice?Customs Regulations (19 CFR 141.81) state that a commercial invoice shall be presented for each shipment of merchandise at the time the entry summary is field.  In order for the broker to complete or prepare your entry you must present him with an invoice.  Customs does allow for a pro-forma type invoice to be used in lieu of an actual commercial invoice (bill of sale).Even if you’re attempting to make an informal entry direct with U.S. Customs (not utilizing your broker) you must always have some invoice to present to the CBP Officer.  Failing to provide CBP with some form of invoice removes a valuable tool they would need to do their job.

Try to remember that you’ll always need some invoice for CBP (Customs) when you ship goods to the USA.
Power of Attorney:  How do I complete a Power of Attorney (POA)?Completion of a Power of Attorney is very complex and varies depending upon the legal status of the person, individual or business entity authorized to complete the power of attorney.  Trying to provide Power of Attorney completion instructions in an FAQ article would be exceptionally lengthy.  To save yourself time, it is best to work with your broker when completing the POA.
Power of Attorney: Why do I need to complete a Power of Attorney?In as much as the Customs Broker never holds title to the merchandise it is not in their best interest to become the importer of record of goods shipped to the USA.  In order for a Customs Broker to make entry on behalf of a person, individual or business entity they must hold a valid Power of Attorney issued to them by the actual importer or exporter of the goods.  The Power of Attorney can only be issued to the broker by a party that holds title to the goods, such as the seller/export or the U.S. importer / consignee.
Tax Number:  Why must I provide my business tax number of social security number?Making entry of goods into the USA requires that the broker file an “electronic” submission to Customs (CBP).  That electronic submission is commonly referred to as the entry summary on Customs Form CBP 7501.  The entry summary is nothing more than a document full of numbers.  There are country code numbers, tariff numbers, manufacturer identification numbers, duty rate numbers, numbers for the weight of the goods, and numbers for the piece count.  Another mandatory number is the tax number or social security of the ultimate consignee.  Without the “Tax Number” the broker cannot successfully transmit the entry to U.S. Customs (CBP).  In other words, without the “Tax Number” the entry will be rejected by U.S. Customs operating system.  As such your shipment or goods would not be provided a release by U.S. Customs (CBP).The regulatory provisions for the requirement for the ultimate consignee tax numbers is 19 CFR 142.  This provision of the regulations doesn’t specifically advise importers that their tax number must be provided.  Moreover 19 CFR 142.3 provides for instructions in completing the form and directs the trade and the public to a directive called CBP 7501 Instructions.  This document is posted to our website under CBP Customs.  In reviewing the form you see that in Block 22 a mandatory requirement is a tax number for the ultimate consignee (either the company’s nine digit federal tax number –normally referred to as an EIN number- or in the case of an individual their Social Security number must be placed on the document.

So in their own subtle way, CBP tells the importing public that their tax number must be provided in order for the entry to be accepted by CBP, but they leave it to the Customs Brokers to explain the requirement to the importing public.

Your tax number must be provided or the broker cannot complete your CBP 7501 entry summary document and electronic submission to the government.