Importer of Record vs customs broker: who answers for the entry, the duties, and the records

A licensed customs broker prepares and files an entry with U.S. Customs and Border Protection (CBP). The Importer of Record (IOR) is the party the entry is filed for, and it stays answerable for the duties, the accuracy of the declaration, and the records, even when a broker does all of the paperwork. The two roles usually appear on the same shipment, which is why they are so often confused.

Under 19 U.S.C. §1484(a)(2)(B), the information required for entry is filed by the owner or purchaser of the merchandise or, when appropriately designated by the owner, purchaser, or consignee, a person holding a valid customs broker license under 19 U.S.C. §1641. A broker can therefore be named as IOR, but only by designation, and the liability goes with the name.

What the entry statute says about the Importer of Record

Under 19 U.S.C. §1484(a)(1), entry is made by “one of the parties qualifying as ‘importer of record’,” either in person or by an agent authorized in writing, and the filing of the declared value, classification, and rate of duty is made using reasonable care. Under §1484(a)(2)(B), the importer of record must be one of the parties eligible to file: the owner or purchaser, or a licensed broker they designate.

The duty of care sits with the IOR even when an agent files. The statute allows the agent to act; it does not move the standard. The Importer of Record page covers the role in full.

What the broker statute says about the customs broker

Under 19 U.S.C. §1641(b)(1), no person may conduct customs business, other than solely on behalf of that person, unless that person holds a valid broker license. Customs business covers the entry of merchandise, its classification and valuation, and the payment of duties, as defined in 19 U.S.C. §1641(a) and 19 C.F.R. §111.1.

Hiring a broker is not required. An owner or purchaser may file its own entries under §1484. Anyone who files entries for others must be licensed.

Side by side

Who answers for the duties

19 C.F.R. §141.1(b) provides that liability for duties is “a personal debt due from the importer to the United States which can be discharged only by payment in full.” It adds that “payment to a broker covering duties does not relieve the importer of liability if the duties are not paid by the broker.”

A broker must say so in writing. 19 C.F.R. §111.29(b)(1) requires this notice to clients: “If you are the importer of record, payment to the broker will not relieve you of liability for customs charges.” 19 C.F.R. §141.1(b) also states that delivering a customs bond with an entry is solely to protect the revenue and does not relieve the importer of liabilities incurred.

If the classification, value, or origin on an entry is wrong, the exposure sits with the IOR. Penalties for fraud, gross negligence, and negligence are set by 19 U.S.C. §1592.

What a broker must do under 19 C.F.R. Part 111

Brokers carry duties of their own, and they matter to the IOR because they define what a broker is responsible for:

• Pay to the Government, on or before the due date, any duty a client has paid to the broker (19 C.F.R. §111.29(a)).
• Exercise due diligence to ascertain the correctness of information it gives a client, including advice on payment of duties (19 C.F.R. §111.39(b)).
• Advise a client promptly when it knows of a client error or omission, and advise on corrective action (19 C.F.R. §111.39(c)).
• Execute the customs power of attorney directly with the importer of record, not through a freight forwarder or other third party (19 C.F.R. §111.36(c)(3)).
• Obtain a valid power of attorney before transacting customs business in the principal’s name (19 C.F.R. §141.46).

None of these makes the broker the importer. The broker works from the invoices and product facts the IOR supplies, and the entry is only as accurate as those facts.

Can a customs broker be the Importer of Record

Yes, by designation. Under 19 U.S.C. §1484(a)(2)(B), a licensed broker qualifies when appropriately designated by the owner, purchaser, or consignee. In that case the broker is the named party on the entry, not only the agent, and the obligations that attach to the IOR attach to it. See who has the right to make entry.

Freight forwarders and consignees

A freight forwarder arranges transportation. Unless it also holds a broker license, it cannot conduct customs business for others under 19 U.S.C. §1641(b)(1), and arranging the freight does not give it the right to make entry. A consignee is the party to whom goods are shipped; being named on a bill of lading does not by itself make a party the owner or purchaser. The definitions post sets out the terms.

Foreign companies

A company outside the United States that owns the goods when they enter can be its own IOR. Under 19 C.F.R. §141.18, a nonresident corporation may enter merchandise for consumption only if it has a resident agent in the State where the port of entry is located, authorized to accept service of process, and files a bond on CBP Form 301 with a resident corporate surety. A U.S. broker can file for it, but the broker’s filing does not replace those requirements or move the liability. The foreign Importer of Record requirements post covers them.

The facts that decide

• Who is named as importer on the entries today, and whether that party owns or purchases the goods at entry
• Whether the customs power of attorney was executed directly between the broker and the IOR
• Whose bond covers the entries
• Who keeps the entry records, and where they are held for five years from the date of entry
• Whether the party named as IOR is a nonresident corporation subject to 19 C.F.R. §141.18

Tell us what you import and how your entries are filed today, and we’ll show you where you stand: see if you qualify or write to ship@iorusa.com.

Sources

• 19 U.S.C. §1484, entry of merchandise
• 19 U.S.C. §1641, customs brokers
• 19 U.S.C. §1592, penalties for fraud, gross negligence, and negligence
• 19 C.F.R. §141.1, liability of importer for duties
• 19 C.F.R. §141.18, entry by nonresident corporation
• 19 C.F.R. §141.46, power of attorney retained by customhouse broker
• 19 C.F.R. §111.29, diligence in financial dealings
• 19 C.F.R. §111.36, relations with a freight forwarder
• 19 C.F.R. §111.39, responsibility to clients
• 19 C.F.R. §163.4, record retention period

This post summarizes publicly available federal rules for general information. It is not legal advice. Requirements are subject to rulemaking and change. Verify current requirements against the Code of Federal Regulations and CBP guidance.