Customs Broker

What it means

Federal law draws the line: no person may conduct customs business on behalf of someone else without a valid customs broker's license, although anyone may handle their own.^[1] CBP issues licenses to individuals and to corporations, partnerships and associations, under section 641 of the Tariff Act of 1930 and the regulations in 19 CFR Part 111.^[3] CBP points out that brokers are licensed by the agency but are not CBP employees.^[2]

Hiring a broker does not move the legal responsibility. CBP tells importers that even when using a broker, the importer of record is ultimately responsible for the correctness of the entry documentation and for all duties, taxes and fees.^[2] A customs broker is also a different role from a freight broker, who arranges truck transportation, and from a freight forwarder, who arranges the international move; one company can hold more than one role, but only the customs broker license allows customs business for others.

What is customs business?

"Customs business" is the legal term that defines a broker's job. The statute and the regulations both define it as activities involving transactions with CBP concerning:^{[1] [4]}

• Entry and admissibility of imported merchandise.
• Classification and valuation of that merchandise.
• Payment of duties, taxes or other charges that CBP assesses or collects because of importation.
• Refund, rebate or drawback of those duties, taxes or charges.
• Preparing documents in any format, and electronically transmitting documents or parts of documents intended to be filed with CBP for any of the above, whether or not the preparer signs or files them.

Two things are carved out. The mere electronic transmission of data received for transmission to CBP is not customs business, and neither is a corporate compliance activity.^[4] Relaying someone else's data is outside the definition; preparing the entry is inside it.

What does a customs broker do?

Customs brokerage is the service of doing that customs business for a client. On an ocean import, it means preparing and filing the entry, settling the classification and value of the goods, paying the duties and fees owed, and dealing with CBP until the shipment is released, all within the activities the definition lists.^[4] The regulations add duties that fall on the broker itself:^[8]

• Due diligence. A broker must exercise due diligence in making financial settlements, answering correspondence and preparing or filing records.
• Paying on time. Duties and other charges a client pays through the broker must be paid to the government by the due date; client payments received after the due date must be passed on within 5 working days.
• Liability notice. Clients must be told, on or attached to the power of attorney and at least once every 12 months, that paying the broker does not relieve them of liability for customs charges if the broker fails to pay. Clients may pay customs charges with a separate check payable to U.S. Customs and Border Protection, which the broker delivers to CBP.

Brokers can work through employees, but only under the broker's authority. An employee acting solely for the employing broker needs no license of their own, and the broker is strictly responsible for that employee's acts within the scope of employment.^[5] The regulations call this "responsible supervision and control": enough oversight that employees give substantially the same quality of service the broker must provide.^[4]

How a customs broker gets licensed

An individual applicant must:^[6]

• Be a U.S. citizen on the date the application is submitted, and not an officer or employee of the federal government.
• Be at least 21 years old and of good moral character.
• Pass the customs broker license examination with a grade of 75 percent or higher, within the 3 years before applying.

The examination is given twice a year, on the fourth Wednesday in April and October.^[7] A corporation, association or partnership can be licensed when at least one officer or member holds an individual license.^[1] A licensed broker also needs permit authority: a national permit is sufficient to conduct customs business throughout the U.S. customs territory.^[5] CBP's 2022 modernization rules moved brokers to that national permit framework, and CBP publishes a "Find a Permitted Broker" directory.^[3]

Why it matters

Until the broker files the entry and CBP releases the container, it cannot leave the terminal, and free time keeps running. A late or wrong filing is often the reason a box sits. RapidShips is not a customs broker: its East Brunswick, NJ dock receives containers for devanning, transloading or storage once the importer's broker has secured release.

Do you need a customs broker?

Not by law. Importers or exporters transacting customs business solely on their own account need no license, and neither do their own regular employees or officers acting for them.^[5] CBP says importers often hire a broker, particularly when they find import procedures complicated, but they may make entry on their own.^[2] The trade-offs, and when self-filing makes sense, are covered in do I need a customs broker?

Example

Illustrative only: a small importer brings in its first 40-ft container of furniture through Port Newark. It signs a power of attorney with a licensed customs broker, sends the commercial invoice, packing list and bill of lading, and arranges a customs bond. The broker classifies the goods, files the entry and entry summary, pays the duty from funds the importer sends, and tells the importer when CBP releases the container so the trucker can book a pickup. If CBP later finds an error, the importer, not the broker, answers for the duties.

Frequently asked questions