Type 86 Requirement for Brokers to Act as IOR Likely to Deter Participation, NCBFAA Says
CBP's requirement that consignees appoint customs brokers to be importers-of-record on Type 86 entries creates "a significant business risk and is likely to deter customs brokers from filing type 86 entries," the National Customs Brokers & Forwarders Association of America said in comments on the agency's test of the entry type (see 1908120019). The new entry type is being tested as a way to file informal entries in ACE for low value shipments. CBP is accepting comments through the duration of the test.
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It's generally unusual for brokers to be IORs for importer clients, the NCBFAA said. "As the importer of record, the broker will be required to assume responsibility for the legitimacy and correctness of the import transaction despite the fact that they will often lack specific knowledge regarding the nature of the merchandise and the parties in interest," the trade group said. The new potential risks are "particularly acute where the goods are subject to [partner government agency (PGA)] reporting requirements and the broker may not possess sufficient information about the underlying goods to determine whether they are PGA compliant," the association said. The group notes that for manifest clearances, "the carrier is not required to assume responsibility for the merchandise declaration and we question the need for an alternate process for Type 86 entries."
CBP also needs to provide more clarity in multiple places. For example, under the limit of duty-free entry for low value shipments to one person per day, CBP will need to define "one person," the NCBFAA said. "Is it the shipper? Is it the consignee? Can that party can be a nonresident foreign entity?," the group asked.
Also unclear is how that limit will be enforced, the group said. "The broker is not in a position to know whether a person is exceeding the $800 per day rule; different carriers could be used to import multiple packages which in total exceed the $800 limit. An individual broker has no visibility to the delivery of other packages and must rely upon the information provided by the owner, purchaser or consignee to identify the merchandise as eligible for a Type 86 entry."
The association also asked for CBP to clarify its policy toward redelivery notices. Specifically, CBP should say that such notices would be issued "to the owner, purchaser or consignee rather than the customs broker," it said. "Moreover, since the Type 86 entry is not secured by a bond, CBP should clarify what will happen if the goods cannot be redelivered? Whereas liquidated damages would normally flow as a consequence of the importer's breach of the basic entry bond, Type 86 entries do not require a bond and therefore CBP will be unable to assess liquidated damages. CBP should provide guidance with regard to the potential penalty framework associated with a failure to redeliver merchandise released under entry Type 86. Specifically, who is at risk for a penalty assessment, in what amount and under what statutory authority?"