The Importer of Record (IOR): Responsibilities, Benefits, and Requirements

In the global trade and logistics industry, the role of the Importer of Record (IOR) is essential for ensuring compliance with various customs and legal regulations. Understanding the function of the IOR is critical for businesses involved in importing goods, as it affects everything from documentation and tariffs to legal responsibility.

In this blog, we will explore the concept of the Importer of Record, its responsibilities, who can be an IOR, and the importance of compliance. We’ll also delve into the differences between an Importer of Record and other key players, such as consignees and customs brokers, and the process for becoming an IOR.

What Is an Importer of Record (IOR)?

An Importer of Record (IOR) is the entity or individual responsible for ensuring that imported goods meet all the legal requirements set by customs authorities. This includes handling the documentation, valuing the goods correctly, and paying duties, tariffs, and other related fees. The IOR must also ensure compliance with the destination country’s regulations and laws governing imports.

In the United States, the Customs and Border Protection (CBP) created the role of the Importer of Record to secure imports from threats and guarantee the payment of duties on all imported goods. Without an IOR, the process of importing could face significant delays, legal hurdles, and even rejection by customs authorities.

What Does an Importer of Record Do?

The IOR’s primary responsibilities include:

1. Handling Import Documentation: Ensuring that all the paperwork related to the shipment is in order and compliant with customs regulations.

2. Paying Duties and Fees: The IOR is responsible for paying all applicable duties, tariffs, and other related fees.

3. Legal Compliance: The IOR ensures that the goods being imported comply with all the laws, regulations, and standards of the destination country.

4. Temporary Ownership: Until the goods are fully cleared by customs, the IOR has temporary ownership of the items. Once approved, the goods can be distributed or delivered.

5. Managing Customs Procedures: The IOR must work with customs authorities to get the shipment cleared, ensuring that the goods are correctly classified, valued, and documented.

In simple terms, the Importer of Record acts as a bridge between the customs authorities and the importer, ensuring smooth transit of goods into the country.

Who Can Be the Importer of Record?

Several parties can take on the role of Importer of Record, including:

• Owner or Purchaser: The owner of the goods being imported, or the individual or business purchasing them, often serves as the IOR.
• Exporter: In some cases, the exporter may act as the IOR, especially if they are authorized by government agencies to export goods.
• Consignee: The consignee, or the person or business receiving the shipment, can also act as the IOR, provided they have the necessary knowledge of the import process and customs requirements.
• Customs Broker: A customs broker, who specializes in handling customs procedures and documentation, can be appointed as the IOR on behalf of the importer.

In many cases, businesses may choose to appoint a customs broker as the IOR to simplify the process. However, it is important to remember that the IOR bears the legal responsibility for the goods until they are cleared by customs.

Importer of Record vs. Customs Broker

Although a customs broker can act as an IOR, the two roles are distinct. A customs broker primarily handles the documentation and paperwork needed for import clearance. They are experts in understanding and navigating the rules and regulations of international trade. On the other hand, an IOR takes on additional responsibilities, such as paying duties, ensuring compliance with legal requirements, and temporarily owning the goods until they are cleared.

In short, while a customs broker manages the logistics and documentation of an import, the IOR takes on the legal and financial responsibilities for the shipment.

Importer of Record vs. Consignee

The roles of the Importer of Record and the consignee are often confused. The key difference lies in the timing of their responsibilities.

The Importer of Record is responsible for getting the goods cleared by customs and ensuring all legal requirements are met. The IOR handles the initial stages of the import process, such as filing paperwork, paying duties, and ensuring compliance.

The Consignee becomes responsible for the goods once they have been cleared by customs. The consignee typically takes ownership of the goods after clearance and is responsible for their delivery and distribution.

Interestingly, the consignee can also serve as the IOR if they have the necessary knowledge and resources to fulfill the duties of the Importer of Record.

Importer of Record vs. Exporter of Record

The Exporter of Record (EOR) is the counterpart to the Importer of Record, but on the export side of the transaction. The EOR ensures that all legal requirements for exporting goods from a country are met, including obtaining the necessary documentation, paying any export duties, and complying with export regulations.

The EOR and IOR often work together to ensure that goods are transported smoothly between countries, with each taking responsibility for their respective part of the transaction.

How to Become an Importer of Record?

Becoming an Importer of Record involves obtaining an IOR number from customs authorities. In the U.S., this is managed by the Customs and Border Protection (CBP), and the process typically includes:

1. Filing a CBP Form 5106: This form is required to establish an entity as an IOR and to obtain an importer number.
2. Submitting Documents: You will need to provide documents such as a power of attorney, identification, and articles of incorporation (for businesses).
3. Paying a Fee: There is usually a fee associated with applying for an IOR number.

Once these steps are completed, the CBP will issue a unique IOR number, which will be used to identify the importer in all future transactions with customs.

What Is an Importer Number?

An Importer Number is a unique identifier assigned to the Importer of Record. In the U.S., this number is used by the CBP to track and process imports. The format of the importer number can vary depending on whether the importer is a U.S.-based entity or a foreign company.

• U.S. Importers: The importer number is typically based on the company’s Tax ID or EIN, with two additional zeros added at the end.
• Foreign Importers: Foreign entities importing into the U.S. will have a different format, which is used to differentiate them from domestic importers.

What is an Importer of Record (IOR) Number?

An Importer of Record (IOR) number is a unique identification used by companies or individuals responsible for ensuring that imported goods meet all legal and regulatory requirements. The IOR is crucial for customs clearance and handling taxes or duties when goods are imported into a country.

Formats of IOR Numbers:

– U.S. Importers: Their IOR number typically looks like this: 12-123456789.

– Foreign Importers: The format is slightly different and may look like: 123456-12345.

These formats help customs differentiate between local U.S. importers and those from other countries.

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

There are several ways to find or create your IOR number:

1. Company’s Tax ID Number (EIN)

If you have a business, the easiest way is by using your company’s Tax ID or Employer Identification Number (EIN). Simply add two zeros at the end of your EIN to create your importer number. For example, if your EIN is 12-3456789, your IOR number would be 12-345678900.

2. Social Security Number (SSN)

If your business doesn’t have a Tax ID or EIN, especially if it’s a sole proprietorship, you may use the founder’s Social Security Number (SSN) as the IOR number.

3. CBP Form 5106

You can also get an IOR number by filling out CBP Form 5106 with U.S. Customs and Border Protection. This form is necessary if:

– You don’t have an importer number on record.

– Your previous IOR number has been voided.

– You need a new IOR number for any reason.

Once filed, your IOR number will remain active for up to a year after your last import. If you don’t use it within this period, the number becomes void, and you’ll need to file the CBP form 5106 again to reactivate or get a new IOR number.

Importer of Record Responsibilities

The IOR has several key responsibilities that ensure the smooth importation of goods. These include:

1. Evaluating and Classifying Goods: The IOR must correctly classify the imported goods according to customs codes and regulations.
2. Paying Duties and Fees: The IOR is responsible for paying all duties, tariffs, and other fees associated with the import.
3. Filing Documentation: The IOR must ensure that all necessary documentation is filed with customs authorities, including invoices, shipping documents, and permits.
4. Ensuring Compliance: The IOR must make sure that the imported goods comply with all regulations and laws of the destination country, including safety and environmental standards.
5. Assuming Responsibility for the Goods: The IOR takes temporary ownership of the goods until they are cleared by customs and can be delivered to the consignee.

Compliance with Customs Regulations

One of the most critical responsibilities of the IOR is ensuring compliance with customs regulations. Failure to comply can result in fines, delays, or even the seizure of goods. Customs authorities may enforce compliance through inspections, audits, and penalties.

To avoid these issues, the IOR must stay updated on all relevant regulations and work closely with customs authorities to ensure that all requirements are met.

Validating Power of Attorney

In many cases, the Importer of Record may not be able to handle the import process themselves. In these situations, they can appoint a third party, such as a customs broker, to act on their behalf. This is done through a Power of Attorney, a legal document that grants authority to another individual or entity to act on behalf of the IOR.

A Power of Attorney is required for customs brokers to clear goods and manage customs entries on behalf of the IOR.

Conclusion

The role of the Importer of Record is crucial in international trade. Acting as the legal and financial point of contact for customs authorities, the IOR ensures that all necessary documentation is in order, duties and tariffs are paid, and compliance with regulations is maintained. Whether the IOR is the owner, purchaser, consignee, or customs broker, they play a vital role in the smooth importation of goods into a country.

By understanding the responsibilities and requirements of the Importer of Record, businesses can streamline their import processes, reduce delays, and avoid costly penalties. Whether you’re a business owner looking to import goods or a customs broker assisting your clients, the role of the IOR is one that cannot be overlooked.