Why Do I Need An IRS Number When Importing Into The US?
You have made your sale, shipped the goods to your US buyer, and the shipment is on its way to the border. Then, without warning, the goods are stopped at the port of entry, and the customs broker requests an IRS number. You may wonder what an IRS number is and why it is needed. Let's dive into this scenario a little deeper.
Internal Revenue Services (IRS) Tax Numbers are Required when Importing into the US
Importer of Record Requirements
First, all goods entering the US from overseas are considered imports, and US Customs and Border Protection (CBP) must approve them for entry. The company or person importing those goods is considered the importer of record.
Ultimate Consignee Verification
CBP requires documentation that includes shipment details, such as the identification of the ultimate consignee. An ultimate consignee is a person, party, or designee in the United States who will receive the shipment. The ultimate consignee is usually the buyer of the goods. CBP uses either a EIN or SSN, issued by the IRS, to identify the ultimate consignee:
- Employer Identification Number (EIN): Issued to business entities
- Social Security Number (SSN): Issued to individuals
Without an IRS number, CBP cannot identify the ultimate consignee and will not allow the shipment into the US.
US Customs states the following.
"The appropriate identification number for the Ultimate Consignee is an Internal Revenue Service employer identification number if a Social Security number. If the appropriate Ultimate Consignee identification number is not provided at the time of entry or release, entry of the merchandise shall be denied."
(Source: CUSTOMS DIRECTIVE NO. 3550-079A)
One IRS Number Per Ultimate Consignee
The IRS/EIN or SSN is specific to the ultimate consignee. The IRS issues these numbers directly to the company or individual. Therefore, if someone in the US buys a host of products from you, you would declare the IRS number for that buyer on the entry declaration to US Customs.
If you have multiple buyers, it's best to declare each transaction separately and provide the IRS number for each buyer.
Reasons for Stopped Shipments That Include an IRS Number
If Customs stopped a shipment that included an IRS number, it could be for two reasons.
- Missing from CBP Database: The ultimate consignee of the shipment had never purchased goods from a foreign party and therefore is not in the US Customs database.
- A deactivated account: Deactivation happens when more than a year has passed since the ultimate consignee last received an import.
If the IRS number is not on file or has been deactivated by US Customs, it will need to be added to their database by filing a Customs Form 5106.
Create or Update the Ultimate Consignee with Customs Form 5106
A Customs Form 5106 is used by US Customs to input the following data about an ultimate consignee into their database:
- Physical address
- IRS number
The Customs Form 5106 must be on file for all consignees at entry.
The ultimate consignee only needs to complete this form once, as long as they continue to receive goods regularly. They will also be required to provide a copy of photo ID for verification. If you have not used the 5106 in a year, you must reactivate it.
Your customs broker can query the ultimate consignee information with US Customs and advise you if they have an active 5106 on file. This simple and proactive step can save you much hassle.
Filing A Customs Form 5106
Your customs broker can query the EIN or your SSN before shipping to confirm if the 5106 is on file or if it needs updating. If a 5106 is not on file with US Customs your customs broker can supply you with one. You can then ask your buyer to fill it out. After your buyer returns it to you, give it to your custom broker, who will send it to Customs. CBP will then add it to its database.
In summary, if you are selling to US buyers from outside the US and are responsible for declaring the goods at the port of entry, you must ensure your buyer has an IRS number. If they do not, your customs broker can connect you with the necessary resources available to apply for one. We are here to help!
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