How to Import into the US

Importers are expected to pay an import tax on virtually every item they import, but few know how much they owe until their shipments arrive in the US.

Many importers are overcharged by US Customs at the border because they did not purchase a copy of the US Harmonized Tariff Schedule and properly classify their imports.

Import taxes are based on the type of item you are importing and where it’s coming from.

How do I know how much I will owe for my imports?

Import taxes for every item imaginable can be determined using the United States Harmonized Tariff Schedule (HTSUS, USHTS, or HTS for short).

This exceptionally large book breaks down into categories virtually every product and commodity imported into the United States. Each line item contains a ten digit classification number, a product description, and a duty rate. Find your item and apply its rate to calculate what you will owe.

Do I have to classify my item?

Every item that comes into the US must be classified with the Harmonized Tariff Schedule. If you don’t classify your item, US Customs will charge you a fee to do it for you.

Before you let Customs classify your product, remember that import tariffs are the second largest source of revenue next to the IRS.

What are Import Taxes?

Import tax (also known as an import duty or import tariff) is collected by US Customs on every import that comes into the US.

Import taxes are a source of income for the US Government and are a way to restrict or facilitate the import of certain commodities.

There are three primary purposes behind the USHTS:

1. The US Harmonized Tariff Schedule is used to assess import duties and taxes on imports. The US Customs Service is the second largest source of revenue for the US Government, second only to the Internal Revenue Service.

2. The HTS is used to track import and export statistics for the US Department of Census. Each month hundreds of billions of dollars in goods and services are imported and exported from the United States. The Tariff Schedule is designed so that the Federal Government can effectively track the import and export of individual product groups into and out of the United States.

3. Lastly, the USHTS is a tool to enforce the United States political agenda. By raising and lowering duty rates and import restrictions from specific countries or around the world, the United States can exercise a certain amount of economic influence.

You can use the Tariff Schedule to calculate duties and taxes on imports. All imported products must be classified with the HTS before they will be allowed into the United States.

Question

What is OGA?

Answer

The term OGA refers to Other Government Agency. Part of the mission of US Customs is to regulate and apply duty to incoming shipments which will enter the commerce of the United States.

All imports are subject to the import requirements of US Customs, but some products face additional regulations from various other government agencies. It is the responsibility of US Customs to enforce the regulations imposed by other agencies at the port of entry. Examples of other government agencies include:

• FDA – the Food and Drug Administration which regulates food, drugs, and consumer/commercial products which may have an impact on the health of the user.
• BIS – the Bureau of Industry and Security which regulates the import and export of “dual-use” goods that have both civilian and military applications.
• EPA – the Environmental Protection Agency which regulates imports that may have an impact on the environment.
• DOT – the Department of Transportation which regulates the import of motor vehicles and other forms of transportation.
• PMDTC – the Office of Political Military Defense Trade Controls which regulates the import and export of products and technology that may impact the national security of the United States.

Question

What is a Line Release?

Answer

The answer to this question lies in 19CFR142.41, subpart D which states:

Sec. 142.41 Line Release.

Line Release is an automated system designed to release and tract repetitive shipments. It is a method of entry or immediate delivery extended to importers of merchandise which Customs deems to be repetitive and high volume. Line Release may be used only at locations approved by Customs for handling Line Release. At certain high-risk locations along the land borders of the United States (the locations to be published in the Federal Register), which are approved by Customs for handling Line Release, the use of Line Release for particular shipments may be denied by Customs unless the imported merchandise is transported by carriers that participate in the Land Border Carrier Initiative Program (see, subpart H of part 123 of this chapter).

Please note: This article is intended for informational purposes only and is not specific legal advice. As an importer, it is your responsibility to meet all the legal requirements for importing goods.

Transshipment is the act of shipping goods to an intermediate destination prior to reaching their ultimate end-use. Transshipment is a common practice with logistic benefits, but can be used to illegitimately to disguise country of origin or intent of the goods.

Transshipment is commonly used by smugglers and terrorists seeking to disguise the point of origin of their goods from Customs officials. Certain countries like Libya, North Korea, and Syria are considered higher risk for security threats while countries like China and Taiwan are likely sources for counterfeit goods. Importers can transship goods both intentionally and accidentally. Intentional transshipments are done to avoid higher duty rates levied on certain countries, avoid import restrictions like visa and quota restrictions, or make use of a special trade program to drastically lower duty rates.

Accidental transshipments are usually caused by miscommunication between foreign vendors or US buyers. Too often, US importers do not recognize the need for properly declaring country of origin and see reduced duty rates as smart business. Foreign vendors typically do not have the in-depth knowledge of US Customs regulations to advise against the practice.

Penalties

In addition to the loss of import privileges and seizure of imported merchandise, importers practicing transshipment may also be subject to an array of civil penalties under 19 U.S.C. 1592.

Maximum penalties for transshipment are:

• Fraud: An amount not exceeding the domestic value of the merchandise.
• Gross Negligence: The lesser of
  • the domestic value of the merchandise, or
  • four times the lawful duties, taxes, and fees, or
  • if the violation did not affect the assessment of duties, 40 percent of the dutiable value of the merchandise.
• Negligence: The lesser of
  • the domestic value of the merchandise, or
  • two times the lawful duties, taxes, and fees, or
  • if the violation did not affect the assessment of duties, 20 percent of the dutiable value of the merchandise.

Question

What’s the maximum amount of money Customs can fine a person for negligence in importing (if the circumstances were not disclosed beforehand to Customs)?

Answer

According to 19 CFR 162.73(a)(3)(ii), an importer can be penalized 20% of the dutiable value of the goods.

Question

Are fines with Customs set in stone? Do they have any room to work with importers for special circumstances?

Answer

Customs can work with penalties and mitigate fines at their discretion if

1. The importer is inexperienced, and the fine/penalty is a result of that inexperience
2. The importer in violation takes steps to correct the source of the penalty (remarking goods, repackaging, fumigation, etc.)
3. The importer has a long-standing history of violation-free imports.
4. An error was made by Customs.

Question

What would cause Customs to seize merchandise?

Answer

According to 19 CFR 171 Appendix B G, Customs decision to seize merchandise can be influenced if:

1. The commodity is prohibited for import.
2. There is an import restriction on the merchandise.
3. The importer has stopped paying required duties and taxes on their imported merchandise.
4. Customs believes they must seize an importer’s goods in order to ensure they receive payment.

Question

After making a verbal report to Customs about an import violation, how long do I have to provide a written statement?

Answer

According to 19 CFR 162.74(a)(2), an importer has 10 days from the time the oral report is made to provide a written statement to the Fines, Penalties and Forfeitures Officer.

Question

I’ve made an error with Customs in the amount of duty I have to pay and have been penalized, but Customs has agreed to a reduced amount to cover everything I owe. How can I make sure it’s official?

Answer

This is known as “an offer in compromise.” In order for it to be official, you must receive notification in writing from CBP that they received the offer.

Question

We imported a commodity that displayed a trademark which we do not own and Customs seized the shipment. The trademark owner gave us written permission to import the merchandise fourteen days after we were notified of the seizure. How long do we have to get the seizure and penalty reversed?

Answer

You have thirty days from the date the notice of seizure was mailed to petition for relief.

Please note: This article is intended for informational purposes only and is not specific legal advice. As an importer, it is your responsibility to meet all the legal requirements for importing goods.

Below are most of the initial HTS classification categories that precious stones and gems will fall into.

Diamonds, gems, and gemstones are a highly sought after commodity available from a variety of regions around the world. Due to the number of locations where stones are available, the high value of gemstones and their limited availability, they are often subject to very high US duty rates and stringent import regulations. If you are looking to import gemstones into the United States, this guide is for you.

Where to buy:

Diamonds

90% of the import market is tied to diamonds. They originate primarily from Africa but can be found in almost any part of the world.

Garnets

Garnets are found in the United States, Sri Lanka, Brazil, India, and various parts of Africa

Amethyst

Amethyst is found mainly in Brazil, Uruguay and Zambia.

Aquamarine

Aquamarine is found mainly in Brazil, Nigeria, Zambia, Madagascar and Ukraine.

Emeralds

Emeralds are found mainly in Colombia, Brazil, Zambia and Zimbabwe.

Rubies

The finest rubies emanate from Myanmar (Burma, having been mined there since ancient times). Other sources include Thailand, Vietnam, Sri Lanka, Kenya, Tanzania, Cambodia, Afghanistan and India.

Peridot

Large sizes are mined in Myanmar (Burma) and peridot is also found in China.

Sapphire

Sapphire is found in Sri Lanka, Thailand, Cambodia, Myanmar (Burma), Kashmir, Australia, Nigeria, Kenya, Tanzania, China and the United States.

Opal

Opal sources are Australia, Mexico and the United States.

Citrine

While most citrine is mined in Brazil, other sources include Africa, Australia, Russia and Myanmar.

Topaz

Most topaz is mined in Brazil; other important sources include Africa, Australia, China, Japan, Mexico, Myanmar, Nigeria, Pakistan, Russia, Siberia, Sri Lanka, and the United States.

Classification and Duty Rates

Precious stones, semi-precious stones, pearls, and jewelry are listed in their own chapter in the Harmonized Tariff Schedule of the United States found (as of 09/29/04) here:

USHTS Chapter 71: Natural or cultured pearls, precious or semiprecious stones, precious metals, metals clad with precious metal, and articles thereof; imitation jewelry; coin.

The HTS is the source used by the United States Government and US Customs to determine duty rates.

When classifying gemstones for import, it is important to note the following:

• general condition of the stone – rough cut vs. finished stones,
• the origin of the stone – stones from some regions qualify for special import programs. Read more about special import programs under General Note 3 of the USHTS. Pay particular attention to those programs related to the African Growth Opportunity Act
• Whether the stone is a part of a piece of jewelry.

With these main points in mind, most precious and semi-precious stones fall into the initial categories listed here. Once the initial category has been determined, it is the importer’s responsibilty to consult the USHTS to determine the specific classification and duty rate of their product.

Help

First time importers are encouraged to contact a freight forwarder or licensed US Customs broker for assistance with filing import entries and arranging transportation. When dealing with a freight forwarder or broker, it is important to research your product and its import regulations. As the importer, you will ultimately be responsible for all facets of your import shipment.

Many items cannot be imported into the United States unless the importer has the proper permit or license from the appropriate regulatory authority. Some of the most common restricted items include food, plant and dairy products; alcohol and tobacco products; birds, fish or animals and products thereof, goods from embargoed countries, firearms and ammunition, cultural artifacts from certain countries, and copyrighted materials. The entry of prescription medicines is restricted and subject to the approval of the U.S. Food and Drug Administration (FDA). Depending on the FDA review of the medicine, it may be released to the addressee or seized. There are, however, provisions allowing passengers to hand carry prescription drugs into the United States if they enter through a land border with Canada or Mexico.

Purchasers should also be aware that some products might be considered contraband and cannot be brought into the United States under any circumstances. This includes the obvious, such as narcotics and child pornography, as well as less obvious items such as tainted food products, and other items, a list of which can be found in “Importing Into the United States.” Such merchandise can be seized by Customs, and attempts to import it may subject the importer to civil or even criminal sanctions. If you have any question at all about your purchase, you should contact your closest Customs port and get an opinion before you complete the transaction.

Many import regulations only apply to goods imported for commercial – business or resale – purposes. For instance, most goods imported for personal use are not subject to quota. The one exception to this is made-to-measure suits from Hong Kong, which are subject to quota restrictions regardless of the use they are imported for. On the other hand, import restrictions that are based on health, safety and protecting endangered species apply across the board. Note: Customs is authorized to make judgment calls about what qualifies as personal use. Several suits that are identical or a number of very similar handbags will have a hard time passing the credibility test as items for personal use.