Ever had your shipment stuck at U.S. customs because of paperwork? That’s where an Importer of Record (IOR) comes in. The IOR handles all aspects of importation, from making sure customs procedures are followed to paying any necessary duties and taxes. They are the party accountable for ensuring that goods enter the country without issues.

Understanding the role of the IOR is crucial for businesses involved in international trade. By knowing what the IOR is responsible for, businesses can avoid costly mistakes, streamline their import processes, and stay compliant with U.S. regulations.

What is an Importer of Record (IOR)?

An Importer of Record (IOR) is the person or company U.S. Customs holds responsible for legally and correctly getting your goods into the country.

In simple terms, the Importer of Record (IOR) is the official point of contact and responsible party for a shipment entering the United States. This entity's name and identification number appear on all official import documentation, establishing clear accountability for customs compliance.

What are the Responsibilities of an Importer of Record (IOR)?

The Importer of Record has several critical responsibilities that directly affect the success of an import transaction:

Documentation and Compliance: The Importer of Record must ensure all import documentation is accurate, complete, and submitted according to CBP requirements. This includes commercial invoices, packing lists, bills of lading, and other specific documentation based on the type of goods being imported.

Classification and Valuation: Correctly classifying imported goods under the Harmonized Tariff Schedule (HTS) and accurately declaring their value are fundamental responsibilities. These determinations directly affect the duties and taxes assessed on the shipment. For example, labeling a laptop as ‘electronic device’ isn’t good enough—get the HTS code wrong, and you might pay 20% more in duties.

Duty and Fee Payment: The Importer of Record is financially responsible for all duties, taxes, and fees associated with the imported merchandise, including any additional assessments from post-entry audits or reviews.

Legal Compliance: Ensuring compliance with all applicable laws and regulations, including those related to product safety, labeling requirements, intellectual property rights, and restrictions on certain goods from specific countries.

Record Keeping: Maintaining all import-related documentation for at least five years from the date of entry, as required by CBP regulations.

Responding to CBP Inquiries: Acting as the point of contact for any questions or concerns raised by CBP regarding the imported goods, including requests for additional information or documentation.

Failure to fulfill these responsibilities can result in delays, penalties, seizure of goods, or even criminal prosecution in cases of intentional violations of customs laws.

Benefits of an Importer of Record (IOR)

While the Importer of Record assumes significant responsibilities, this designation also offers several important benefits:

1. Streamlined Import Process: Having a designated Importer of Record with experience in customs compliance can significantly streamline the import process, reducing delays and ensuring smoother customs clearance. 2. Regulatory Expertise: Professional Importer of Record services bring specialized knowledge of customs regulations and requirements, helping businesses navigate complex compliance issues.

3. Risk Mitigation: By ensuring proper compliance with all import regulations, the Importer of Record helps businesses avoid costly penalties, seizures, or other enforcement actions. For example, you misdeclare a shipment of Bluetooth speakers, Customs and Border Protection (CBP) can fine you or even seize the goods. A professional IOR helps avoid that.

4. Market Access: For foreign companies without a U.S. presence, using a third-party Importer of Record service provides access to the U.S. market that might otherwise be unavailable or difficult to achieve.

5. Focus on Core Business: Outsourcing the Importer of Record function allows businesses to focus on their main operations while leaving customs compliance to specialists.

6. Cost Management: Professional Importer of Record services can often secure more favorable duty treatments and identify legitimate duty reduction strategies, potentially lowering overall import costs.

How to Find Your Importer of Record (IOR) Number?

The Importer of Record is identified to U.S. Customs through a unique identification number. For U.S.-based entities, this is typically the company's Internal Revenue Service (IRS) Employer Identification Number (EIN). For foreign entities acting as the Importer of Record, a CBP-assigned importer number is required.

To obtain or verify your Importer of Record number:

1. For U.S. Companies: Your EIN automatically serves as your Importer of Record number. If you don't have an EIN, you can apply for one through the IRS website or by filing Form SS-4.

2. For Foreign Companies: Apply for a CBP-assigned number by completing Form 5106 (Application for Importer Number) and submitting it to CBP.

3. Check Existing Documentation: If you've previously imported goods, your Importer of Record number will appear on CBP Form 7501 (Entry Summary) and other import documentation.

4. Consult with a Customs Broker: A licensed customs broker can help you verify your Importer of Record (IOR) number or assist with obtaining one if needed.

It's important to note that the Importer of Record number must be used consistently on all import documentation to ensure proper tracking and compliance history.

What are the Different Types of IORs?

There are several types of Importer of Record arrangements, each suited to different business circumstances:

Direct Importer

The most common arrangement is where the ultimate consignee (the entity purchasing or owning the imported goods) acts as the Importer of Record. This is typically used by U.S.-based companies that have the necessary infrastructure and expertise to handle customs compliance.

Third-Party IOR Service

A specialized service provider acts as the Importer of Record on behalf of the actual purchaser or owner of the goods. This option is particularly valuable for foreign companies without a U.S. presence or businesses looking to outsource compliance responsibilities.

Customs Broker IOR

In some cases, a licensed customs broker may serve as the Importer of Record, though this arrangement is less common and typically reserved for specific situations.

Non-Resident Importer

Foreign entities that have obtained the necessary identification numbers and established a customs bond can act as the Importer of Record even without a physical U.S. presence, though this requires meeting specific criteria.

A U.S. subsidiary or affiliate of a foreign company may serve as the Importer of Record, leveraging its local presence and knowledge while maintaining a connection to the parent organization.

The selection of the appropriate Importer of Record arrangement depends on factors such as business structure, import volume, compliance capabilities, and strategic objectives.

Who Can Be an Importer of Record (IOR)?

To be an IOR, you need to either own the goods or be responsible for them, be financially solid, and have a bond. Foreign companies can qualify, too, but it takes paperwork.

U.S.-Based Entities: Any U.S. corporation, partnership, or individual with a valid EIN can serve as an Importer of Record, provided they have the financial capacity to cover duties and the ability to ensure compliance.

Foreign Entities: Foreign companies can serve as importers of record if they have obtained a CBP-assigned importer number and established a customs bond. However, this arrangement presents additional complexities and may require professional assistance.

Ownership or Purchase: The Importer of Record must typically have a financial interest in the imported merchandise, either as the purchaser or owner. There are exceptions to this rule, such as when using third-party IOR services.

Customs Bond Holder: The entity must secure a customs bond, which serves as a guarantee to the U.S. government that all duties, taxes, and fees will be paid.

Legal Presence: While not always required to have a physical presence in the U.S., the Importer of Record must be legally established and recognized by U.S. authorities.

It's worth noting that certain entities are specifically prohibited from serving as an Importer of Record, particularly those that have previously violated customs laws or been suspended from import privileges.

Before your next import, decide who your IOR will be, because a small paperwork mistake can turn into a big customs delay. Whether a business chooses to serve as its own Importer of Record or engage a third-party service, understanding the responsibilities and requirements associated with this role is essential for successful importing operations.

For businesses engaged in international trade, carefully considering who will serve as the Importer of Record is a strategic decision that can significantly impact customs compliance, supply chain efficiency, and overall business success. By making informed choices about the Importer of Record function, businesses can navigate the complexities of international trade more effectively, minimize compliance risks, and optimize their import operations.

Frequently Asked Questions

1. Can a freight forwarder or NVOCC act as importer of record?

Freight forwarders and NVOCCs can act as Importer of Record, but it’s uncommon. They would need to take ownership, handle financial responsibilities, and comply with regulations, which most prefer not to do.

2. Can a customs broker be an importer of record?

Customs brokers generally don't act as Importer of Record due to potential conflicts of interest and reluctance to assume financial liabilities. They usually assist with documentation for the actual Importer of Record.

3. Is a customs bond required for imports?

Yes, a customs bond is required for most commercial imports. It ensures that duties, taxes, and fees are paid. Single Entry Bonds cover specific shipments, while Continuous Bonds cover multiple shipments over a year.

4. Can a foreign company be an importer of record without a physical presence?

Yes, a foreign company can be an Importer of Record without being physically present in the U.S., but it must meet specific requirements like obtaining a CBP number, securing a bond, and working with a U.S. customs broker.

5. What is the difference between importer of record and exporter of record?

The Importer of Record ensures compliance with import regulations and pays duties and taxes in the destination country. The Exporter of Record handles export regulations and ensures compliance with licensing and controls in the origin country.