What is an Importer of Record (IOR)?
An Importer of Record(IOR) is an entity or individual who ensures that all the goods are appropriately documented and valued as required by the Customs and Border Protection (CBP). Furthermore, the IOR is also responsible for paying duties, tariffs, and other fees related to the imported shipment.
The IOR plays an integral part in the import-export landscape. The CBP created the role of IOR to secure imports from terroristic threats and guarantee the payment of duties on all imported goods.
What does an Importer of record do?
The U.S. importer of record performs the following tasks:-
- IOR is authorized to bear responsibility for importing a shipment
- IOR is regarded as the consignee or the importer when it comes to documentation/shipping paperwork
- The IOR ensures that the shipment clears the compliance with all legal requirements, laws, and regulations of the place of import
- Importer of record can be the owners, purchasers, consignee, exporter, business entity, or customs broker
- IOR has temporary ownership over the imported items till the shipment is accepted for distribution and delivery.
In simple words, IOR can import anything on behalf of others. They are also responsible for streamlining shipping services.
Also read Shipper's Letter of Instruction | Meaning, Format & more
Who can be the Importer Of Record?
An importer of record definition-wise is generally the owner, purchaser, or consignee who has the ownership of the products being imported into the destination country. A power of attorney generally gives authorization to ensure customs clearance on behalf of the importer.
Owner and Purchaser : Person with a financial interest in the goods being imported or someone who imports the consignment.
Exporter: Person realized by the customs and government authorities to export articles from one country to another.
Consignee: The person who receives and owns the shipment. The consignee takes ownership of the shipment after the customs approves it. An individual or a business entity can act as the consignee in the process. A business entity can be both the importer and the consignee if it imports the products for internal use, storage, or distribution.
Customs Broker: A broker or an agent or any legal entity at the place of import can be more beneficial as an IOR because they can take care of the paperwork.
Generally, buyers themselves of their customs brokers tend to the IORs. The CBP has introduced the concept of an IOR for facilitating easy documentation & clearance for importers in all cases where the actual importing entity is not the entity that will be taking care of documentation.
Think of it as another tool conceptualized by the United States Government to make importing easier and hassle-free.
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What is the difference between a Customs Broker and Importer Of Record?
A customs broker is not entitled to ensure taxes and duties clearance or arrival of the shipment at the place of import. Their involvement is to stay updated with the rules and regulations and manage the paperwork and the required licenses necessary for the import. Whereas an IOR has to ensure that the taxes and duty payments are cleared post the arrival of articles at the place of import.
Importer Of Record VS Consignee
Many organizations get confused between Consignee and Importer of Record. The consignee is responsible for the goods once they have been cleared through customs. They are also responsible for paying import duties and taxes.
On the other hand, one of the main responsibilities of the Importer of Record is to get the goods cleared from customs and ensure that they remain compliant with all the necessary regulations, laws, and statutes of the destination country. It is the responsibility of the IOR to ensure that the shipment is correctly valued, all the import duties and taxes are paid, and all the correct documents and permits are filed.
Interestingly, a consignee can act as an Importer of Record if he has the necessary knowledge of the process and requirements.
Importer Of Record and Exporter Of Record
The Exporter of Record (EOR) is fundamentally the same as the IOR, but applies to exports rather than imports. The EOR is responsible for obtaining and documenting export clearance. Furthermore, the EOR must also ensure that all the US export regulations are complied with.
How to become an Importer Of Record?
To become an importer of Record, one has to apply for an importer of record number by paying a certain fee to the CBP. Post the documents presented are verified by the US Customs, an IOR number is issued to the applicant.
The documents needed are:
- Declaration of the power of attorney
- IDs of applicant
- Duplicates of the articles of incorporation document
What is an Importer Number?
Importer number is a custom assigned unique identification number to an importer of record who wants to import goods to the USA. This number is used in many stages of processing the importing goods as identifiers to your entries of the goods into the States by CBP.
What is the standard form of an Importer Number?
The US importers and foreign importers will have a different standard format of the importer number and will look different. This is basically to differentiate between the US importers and the foreign importers. The number can be of the following type:
- U.S. Importers: 12-123456789
- Foreign Importers: 123456-12345
How do I find my Importer Of Record Number?
You can find your IOR number by using one of the following ways :-
Company’s Tax ID number/EIN: The most common method is using your Tax ID Number, also known as your EIN. By adding two zeros at the end of your Tax ID, your EIN can be easily transformed into an importer number.
Social Security Number (SNN): If your company does not have a Tax ID or EIN, you will have to use the SSN of the company’s founder. Generally, this is done when the company is a sole proprietorship. Under such circumstances, the customs authorities allow the founder’s SSN to replace the traditional importer number format.
CBP Form 5106: To get your unique IOR number, you need to file the CBP form 5106 with the customs. This form can be filed in the following scenarios:-
If you do not have this form already on record
If your number has been voided
If you need an additional importer number
Your number will remain with the customs for a maximum of one year after your last usage of the number to import goods to the US. After this period, your importer number will be considered void, and you will have to fill the CBP form 5106 again.
Importer Of Record Responsibilities
The IOR is responsible for all documentation in the initial assessments of an import to meet the customs’ requirements. Following are the brief responsibilities of an importer of record:
- Evaluating and classifying the imported goods
- Assessing and paying duties, tariffs, and other fees
- Appropriate entry documentation to meet custom requirements
- Making sure all the regulations and statutes are being complied
- Taking full accountability of goods at the time of import
There may be circumstances when an Importer of Record cannot remain present at the time of importing the goods. For these scenarios, they must appoint a Power of Attorney (POA).
Compliance with Customs Considerations
One of the main responsibilities of the Importer of Record is to ensure that they remain compliant with all the necessary regulations, laws, and statutes. An IOR can achieve this through compliance tools, staff training, self-compliance, and self-auditing programs, communication, and PR, executive-level recognition, and Importer Self Assessment Program. CBP prefers voluntary compliance measures but in some cases, the Importer of Record can be subject to enforced compliance.
Enforced Compliance by CBP includes (but not limited to):
- Inspection and Examination of Imports and Samples
- Monetary Penalties Assessment
- Documentation Audits
- An investigation into IoR business dealings
- Civil and Criminal Penalties
Some Agencies have the power and authority to bypass the Importer of Record and deny entry of certain products into the country based on the premise of being a possible threat to the US. Some of the agencies are:
- Environmental Protection Agency (USEPA)
- Food and Drug Administration (USFDA)
- Consumer Product Safety Commission (CPSC)
If CBP or any other agency comes across such products, CBP assumes the responsibility of exporting or destroying the product.
Validating Power Of Attorney
Power of Attorney is a legal document that grants authority to the Importer of Record to act on the behalf of the Importer. To clear goods from customs and to create a customs entry, the customs broker must have a Power of Attorney from the Importer of Record or the consignee of the shipment.
Importer of Record FAQs
Can a foreign company be an importer of record?
Yes. The company has to establish itself as a Foreign Importer of record with a straightforward process that is to check the legitimacy of the business.
How is the importer of record determined?
The importer of record is determined in line with the latest incoterms of 2020 that clearly outlines the roles and responsibilities of the buyer and seller under different incoterms and nominates an Importer of record as well.
Can shipper be the importer of record?
In a Delivered Duty Paid (DDP) shipment, a shipper can act as the importer of record.
Who is Importer of Record on a DAP Shipment?
Under DAP incoterms for shipping, the seller is responsible to deliver the goods till the nominated port address. Thus, the IOR of the shipment is the shipment is the buyer. The buyer can also appoint a 3rd party agency/ broker/ legal entity as an IOR
Who is Importer of Record in DDP?
The seller of the goods acts as an importer of record as they look after both export and import customs proceedings.
Can a Customs Broker be an Importer of Record?
A Customs Broker can act as an Importer of Record but then they will be responsible for all the documentation to make sure that the goods remain compliant with the US regulations and statutes. They will also need to register their company as an Importer of Record and generate an IOR number.
Does Importer of Record own the goods?
If the Importer of Record is a 3rd party agency/ broker/ legal entity, then they can take temporary ownership of the shipment/ goods until they have been accepted by a distribution center/ end-user/ consignee/ importer.
Is consignee the same as importer of record?
As mentioned above, the consignee is the importer of record for your goods. In an import-export transaction, they are also responsible for paying the import duties and any additional freight charges.
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