US DDP imports face tougher IOR verification from January 5

By Amara Osei

US customs brokers must fully comply with new importer-of-record verification requirements by May 6 next year, after the interim final rule takes effect Jan. 5.

The U.S. Customs and Border Protection (CBP) measure covers foreign importers of record (IORs) making formal and informal U.S. entries. It also adds duties for licensed customs brokers and appeared in the Federal Register last week.

What does this change for US importers?

A DDP quotation by itself no longer guarantees that the underlying import arrangement satisfies CBP. Buyers must establish who holds importer-of-record status, which broker files the entry and whether the parties meet the new conditions.

Overseas suppliers offering DDP must provide that structure clearly. Otherwise, the buyer faces more compliance work, uncertain clearance arrangements and the financial risk of a supplier promise that does not survive scrutiny.

In theory, DDP has been an easy commercial route. An overseas supplier typically arranges import clearance and pays duties and taxes, while the U.S. buyer receives what looks like a simpler delivery arrangement. That is the convenience now under review.

The Customs-Trade Partnership Against Terrorism (CTPAT) validation standard determines which foreign IORs can file directly and which need a validated broker:

• A foreign IOR validated under CTPAT can make entries itself or appoint a licensed customs broker that does not need CTPAT validation.
• A foreign IOR without CTPAT must designate a broker that is both licensed and CTPAT-validated to make the entry or act as IOR.
• Where the foreign party is neither the owner nor the purchaser of the goods, the designated broker must act as importer of record.

The rule also tightens the test for claiming U.S. importer-of-record status:

• An individual must be a U.S. citizen or lawful permanent resident.
• A company must be organized under U.S. law and located in the country.
• At least 51% of its beneficial owners must be U.S. citizens or permanent residents who control the business, or who directly own a significant amount of unencumbered U.S. real estate.

Licensed customs brokers must verify a client’s eligibility before declaring that client a U.S. IOR. They must request and review supporting records, which may include corporate documents, financial statements and proof of citizenship or permanent residence.

They must retain the verification records for five years. That turns a broker’s client declaration into a documented, retained file rather than a name checked once and forgotten. For importers and forwarders, the near-term work is straightforward: verify before the entry, not after the problem.

Brokers may request delayed compliance with the new verification requirements before Jan. 5. All must, however, reach full compliance by May 6 next year, while comments on the interim final rule are due by Jan. 5.

The development follows CargoTrans’s recent tariff webinar on the risks attached to DDP arrangements. CargoTrans co-CEO Nunzio De Filippis said: “So that easy button that we spoke about just got harder to press.” He added: “Welcome to the age of strengthening customs enforcement.” Convenience now comes with paperwork.

De Filippis advised buyers to establish exactly who handles the import process when an overseas supplier sells on DDP terms. That means confirming the importer of record, the customs broker, the structure of the arrangement and whether all relevant parties meet CBP’s conditions.

CBP said the measures should improve visibility of foreign importers, strengthen accountability and help ensure duties are collected. The agency cited difficulties pursuing unpaid duties and enforcing customs requirements against foreign entities with few U.S. assets.

For shippers selling into the United States, a DDP offer now needs enough documentation to show the broker and IOR structure. For U.S. buyers, a supplier’s assurance is not a substitute for checking eligibility before accepting the quote. For brokers, vetting and five-year recordkeeping become part of the transaction rather than optional paperwork.

From Jan. 5, the policy trajectory runs toward tighter proof of importer identity and broker standing, with full compliance required by May 6 next year.