CBP to tighten importer requirements

Effective January 5, 2027, U.S. Customs and Border Protection (CBP) is establishing new requirements for foreign importers of record. These regulations also clarify which companies qualify as U.S. importers of record, creating potential challenges for domestic companies with foreign ownership. Until now, the process of setting up and maintaining an entity as an importer of record has been largely a ministerial paperwork exercise.

What is a “U.S. importer of record”?

To qualify as a U.S. importer of record, a company must:

• Be located in the United States;
• Be organized under the laws of the United States; and
• At all times, either:
  • Have at least 51% of its beneficial owners with control of the entity be U.S. citizens or lawful permanent residents; or
  • Maintain direct ownership of a significant amount of unencumbered real property in the United States.

Subject to certain exceptions, a “beneficial owner” is a natural person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise (a) exercises substantial control over the entity; or (b) owns or controls at least 25% of the entity’s ownership interests. In complex corporate structures, companies will need to trace ownership all the way to the natural persons who ultimately hold the indirect interests.

Under the new regulations, every entity must have at least one beneficial owner.

What is a “foreign importer of record”?

Any entity that does not qualify as a U.S. importer of record will be treated as a foreign importer of record.

How will CBP verify that a company qualifies as a U.S. importer of record?

CBP’s approach to compliance will be twofold.

Verification by the customs broker

Licensed customs brokers must verify that an entity meets the requirements to be considered a U.S. importer of record before filing an entry on the importer’s behalf.

U.S. importers of record should be prepared to provide corporate documents to substantiate that the company qualifies under the regulations, including proof of citizenship or lawful permanent residence for each beneficial owner.

Inclusion on the entry summary filed with CBP

Importers, or their brokers on the importers’ behalf, will be required to declare on each entry summary filed with CBP whether the company qualifies as a U.S. importer of record.

The failure to exercise reasonable care in declaring that an entity is a U.S. importer of record constitutes a violation of 19 U.S.C. § 1592. Under CBP’s published penalties guidance, Section 1592 violations can result in penalties ranging from 5% to 80% of the dutiable value of the imported merchandise in a non-duty loss case.

Verification by CBP

CBP may also verify that the company qualifies as a U.S. importer of record. In doing so, CBP may consider the following non-exhaustive factors:

• Whether the entity’s principal place of business is in the United States.
• Whether the entity has a physical presence in the United States where substantial business transactions are conducted (e.g., paying employees, generating revenue, operating retail locations).
• Whether the entity maintains sufficient unencumbered physical domestic assets. “Physical domestic assets” are cash deposited in a U.S. bank account; U.S. Treasury bonds; and real property, inventory, machinery, or equipment physically located in the United States.
• Whether the entity directly owns a significant amount of unencumbered real property in the United States.
• Whether the entity’s gross sales generally exceed its cost of goods sold, and the entity is structured so that it is anticipated to generate its own profit.
• Whether the entity is sufficiently capitalized.

What new restrictions will apply to foreign importers of record?

Foreign importers of record will be subject to the following restrictions:

• Customs Trade Partnership Against Terrorism (CTPAT)-validated entities: The entity may make entries for consumption directly or hire a licensed customs broker to make entry on the entity’s behalf.
• Non-CTPAT-validated entities: The entity must designate a CTPAT-validated customs broker to (a) make entry on the entity’s behalf or (b) serve as the importer of record. If the principal on the broker’s power of attorney is not the owner or purchaser of the merchandise, the broker must act as the importer of record.

What is CTPAT?

CTPAT is a voluntary public-private program led by CBP designed to strengthen international supply chains and improve U.S. border security. In exchange for voluntarily implementing additional supply chain security measures, companies get the benefit of fewer cargo inspections and expedited processing at CBP ports of entry. To be accepted into CTPAT, importers must meet certain minimum security criteria.

Currently, only Canadian foreign importers are eligible for CTPAT validation, so most foreign importers of record will need a CTPAT-validated broker. Using a CTPAT-validated broker does not confer CTPAT benefits on the importer.

Next steps

Before January 5, 2027, companies should:

• Determine whether they qualify as a U.S. or foreign importer of record.
• Collect corporate records (e.g., corporate formation documents, asset purchase records) to substantiate that the company is a U.S. importer of record.
• If the company is a foreign importer of record, confirm the company’s customs broker is CTPAT validated (if the company itself is not CTPAT validated). Alternatively, identify a CTPAT-validated broker and transition to that broker.