The De Minimis issue: Racing Through Customs or Risking Compliance?
As Type 86 de minimis gains traction as a hot topic, curiosity surrounding its intricacies and its potential vulnerabilities to exploitation has surged. With over 20 years of experience in the field, Importal is here to give you a behind the scenes look at how it all works from the eyes of a Customs broker.
Customs Onboarding: De Minimis vs. Traditional Entries
In the de minimis entry process, brokers expedite paperwork by acting as the importer of record and obtaining a POA with the carrier. This means they only need one Power of Attorney to cover all shipments under the Type 86 de minimis threshold. This simplifies the process for importers, as they aren't required to undergo a Customs broker Know Your Customer process to import cargo.
Conversely, shipments over $800 necessitate brokers to secure a POA directly from each importer, along with detailed documentation. This exhaustive onboarding process ensures thorough compliance with regulations but can be time consuming. It's a regulatory balancing act; while speed creates the e-commerce experience, its evident non compliance is inevitable.
What Items Can't Be Cleared by Type 86 De Minimis Entries?
While not widely reported, not everything under $800 can be cleared tax free. Here are items ineligible for Type 86 de minimis entries:
Antidumping and countervailing duty merchandise
Quota merchandise
Goods subject to specific taxes imposed under the Internal Revenue Code and collected by other agencies on imported goods
Alcoholic beverages
Cigars, cheroots, cigarillos, and cigarettes containing tobacco
Cigarette tubes and cigarette papers
Smoking tobacco, including water pipe tobacco, pipe tobacco, and roll-your-own tobacco
Snuff and chewing tobacco
The Type 86 de minimis threshold allows a wide range of duty-free products to flood the US market, including consumer electronics, apparel, cosmetics, household goods, and more. With limited visibility into the origin of these goods, the US market has been flooded with non compliant products, raising concerns about safety, quality, and regulatory compliance.
Our take:
It's evident that de minimis entries offer two significant advantages: speed and minimal landed costs. However, the current process presents notable risks due to more relaxed compliance standards, inevitably leaving loopholes for bad actors. While the efficiency of Type 86 entries is undeniable, it's crucial to acknowledge and mitigate these associated risks to maintain the security of the global trade ecosystem.
