U.S. Customs and Border Protection (CBP) is scrutinizing data on Section 321 entries for compliance with federal rules and regulations, and the increased scrutiny has resulted in more detained and refused shipments. A particular area of concern is the proper value declared on Customs documents for the purposes of Section 321 or Type 86 entries. The wording is very specific and differs from the rules of valuation familiar to many importers and exporters.
“De minimis provides admission of articles free of duty and of any tax imposed on or by reason of importation, but the aggregate fair retail value in the country of shipment of articles imported by one person on one day and exempted from the payment of duty shall not exceed $800.”
One of the many changes addressed in the Trade Facilitation and Trade Enforcement Act of 2015 (TFTEA) legislation was the increase of the de minimis value exemption, commonly referred to as Section 321, from $200 to $800. Many importers have benefited from this increase, which allows for the entry of goods without payment of duties.
Section 321 has become more widely used with CBP’s recent deployment of the Type 86 entry, which allows importers to clear shipments subject to partner government agencies’ (PGA) data reporting requirements (i.e., goods subject to FDA, EPA, NHTSA, etc. or which may require a disclaimer from such). Prior to the advent of Type 86 entries, CBP did not allow these entries under Section 321. However, it has become clear that CBP is reviewing this new data source as a tool to ensure goods imported into the U.S. are in compliance with federal rules and regulations.
For those choosing to ship under the auspices of Section 321 or Type 86, there are four ways to avoid common pitfalls that could delay shipments.
- The declared value of the good(s) must be based on the fair retail value in the country of shipment of the articles.
- The shipment’s value does not exceed $800 USD.
- The value is applied in aggregate to one ship-to party per day.
- Type 86 entries cannot be of certain alcohol or tobacco products or be subject to ADD/CVD duties, quota, or taxed under the IRS Code.
More specifically, this provision allows for goods equaling $800 USD (retail value in the country of shipment) to ship to “one person” on one day to enter the United States free of duty or tax. Note that multiple shipments are allowed as long as they do not exceed the $800 stipulation.
Customs is using many tools to verify the value of imported goods, including but not limited to online searches for websites or other indications of foreign domestic sales of products. If you have specific questions about Section 321 or entry Type 86, please contact Deringer’s Compliance Department.