Explainer: What is a customs entry?
At Cole International, we believe that the more you know, the better your goods will go. Our Explainer posts provide valuable information from customs compliance consultants that you should know about before you make your next move.
We understand that the logistics industry involves complex processes, regulations, and definitions that can be overwhelming to navigate. Cole's Explainer series breaks down key concepts into bite-size knowledge that's easy to consume.
In this Explainer, we’ll examine how some Canadian companies must deal with U.S. customs compliance entries, informed compliance, and the difference between formal and informal customs entries.
What is an entry in U.S. customs?
An entry for U.S. customs refers to an official statement you submit to the U.S. Customs and Border Protection (CBP), providing specific details about your shipment. The Canada Border Services Agency (CBSA) doesn't use an entry system like the CBP, so Canadian importers that start to exchange goods with the U.S. will need to adjust..jpg?width=400&height=267&name=BLog%20Customs%20Brokers%20%20(9).jpg)
The info you need to provide can change depending on the goods imported. In general, the details you need to submit include a description of the merchandise, an accurate customs classification code, and the value of the goods. If you partner with a customs broker, they can submit entries to the CBP on your behalf.
What is a formal entry?
A formal entry typically involves goods of higher value, goods on restricted item lists, and goods that arrive from jurisdictions under trade tariffs. Formal entries typically require in-depth documentation and a bond that ensures you’ll pay the associated duties and fees for the goods.
What is an informal customs entry?
An informal customs entry typically covers imported goods of lesser value that originate from countries with normal trade relations with the United States. A shipment that contains restricted items, or goods from countries with additional tariffs in place, aren’t allowed to submit informal customs entries.
What's the difference between informal and formal customs entry?
There's dozens of potential scenarios and variables that determine whether you need to file an informal entry or a formal entry. However, the main difference between formal and informal customs entries would be the total value of goods that each type of entry covers. You’ll need to submit a formal entry for importing goods with a total value above $2,500. Informal entries are only allowed when importing shipments with a value under $2,500, but some scenarios require a formal entry even if the goods are valued at less than $2,500. For example, importing restricted goods or merchandise from countries with additional tariffs in place will require a formal entry regardless of value.
Formal entries require a customs bond that guarantee the payments of fees and taxes. You won’t need a bond for informal entries, but you’ll still need to pay duties and fees. There are some tax and duty exemptions available for different low-value importing scenarios, such as items from items from Guam, American Samoa, and the U.S. Virgin Islands that range from $200 to $1,600.
Since formal entries require more paperwork, documentation, and advanced payments, the time required to complete the process will be longer than the process for completing informal entries.
What is informed compliance?
Informed compliance is a term used by the CBP to encourage a shared responsibility for ensuring compliance. Businesses take responsibility for following regulations and provide accurate info, while the CBP is responsible for providing tools, education, and resources that make it easier for companies to comply.
Getting your customs entries right the first time helps to keep your goods moving while preventing unexpected delays and costs. Following the concept of informed compliance for entries also reduces the odds of the CBP deciding to take a closer look at your shipments – or worse, conduct a lengthy audit.
The more you know!
We invite you to continue growing your knowledge base by exploring our earlier Explainer posts:
Explainer: Filling out your Cole Proforma Invoice (U.S. Customs)
Explainer: Why businesses work with Customs compliance consultants
Explainer: Container shortage and price increases for ocean cargo
