eCommerce has become an integral part of our daily lives and is now the preferred method of shopping for a majority of people around the world. If we focus on the U.S. market alone, about 16.4% of all retail transactions are expected to be online this year.
While that may seem like a small number, in terms of revenue, the U.S. eCommerce market is poised to hit the $1.1 trillion mark in sales by the end of 2023. Keeping up with this demand essentially means large volumes of shipments being imported into the country.
However, in an industry where customers expect their orders to be delivered in the shortest possible time, online retailers can’t afford to lose valuable time in the long-drawn customs clearance process. Simultaneously, customs officials, too, need a mechanism to ensure that all products being imported into the country are compliant with all the rules and regulations prescribed.
That is where Section 321: Entry Type 86 comes into the picture. This blog will delve into the intricacies of Customs Entry Type 86 and highlight its benefits for the eCommerce industry.
Section 321: Entry Type 86 - A Brief
Entry Type 86 was introduced for Section 321 low-valued shipments in 2019. Its primary purpose is to improve the efficiency of importing eCommerce shipments into the country and their visibility to customs officials.
All eCommerce parcels under the de minimis value of less than $800 are eligible for Entry Type 86. The de minimis value is set per an amendment of the Tariff Act of 1930 and implies that goods valued less than $800 can enter the United States duty and tax-free.
However, while there is no limit on the number of Type 86 entries a person can file in a day, the limitation is that the fair market value of all goods imported on that day does not exceed $800.
For example, a single person can either import one consignment with a total fair market value of $800 or 10 consignments with a value of $80 each.
The Benefits of Section 321: Entry Type 86
Section 321: Entry Type 86 is voluntary, and importers can avail of it if they meet its criteria. The benefits of doing so are as follows:
Expedited Customs Clearance
Section 321: Entry Type 86 shipments are typically cleared faster than traditional customs entries (Formal Entries). This is primarily because CBP’s ACE (Automated Commercial Environment) can process submitted entries automatically without requiring manual intervention.
Simpler Requirements
Section 321: Entry Type 86 also comes with simpler requirements than traditional custom entries, which normally require a bond and entry summary documentation.
Entry Type 86 requires only 10 data elements.
Reduced Customs Clearance Costs
Shipments that meet the di minimis threshold for the Type 86 Entry are also not subject to any duties or taxes. Furthermore, if the shipment is being released into a CFS warehouse, the importer also doesn’t have to pay any Merchandise Processing Fee (MPF).
All of the above factors have direct benefits for importers that also translate into a slew of secondary benefits, such as:
Reduced Risk of Compliance Violations
Repeated customs violations will result in delayed processing times as well as an increased risk of rejection. Section 321: Entry Type 86 is simpler, requires less documentation, and is subject to less scrutiny from U.S. Customs and Border Protection (CBP), which together will mitigate the risk of compliance violations for importers.
Improved Customer Satisfaction and Retention
Statistics show that over 57% of online shoppers order internationally. Add to this the fact that about 22% of online shoppers don’t go through with the purchase due to slow shipping times, and you can see why reducing shipping times for eCommerce sellers is vital.
Section 321: Entry Type 86 helps them do just that by expediting the customs clearance process and reducing shipment delivery times to customers.
The Competitive Edge
Faster delivery times will automatically equate to a competitive edge in the highly saturated and competitive eCommerce arena. That said, while Entry Type 86 does offer a myriad of advantages, there are a few points to keep in mind so that you don’t lose out on them:
- Make sure that all of your shipments meet the eligibility requirements for Section 321: Entry Type 86.
- Provide accurate and complete information on your Section 321: Entry Type 86 submissions.
- Keep your Section 321: Entry Type 86 records up to date.
- Work with a customs broker if you need assistance filing Section 321: Entry Type 86 entries.
- You cannot manipulate a single shipment to mimic several smaller shipments to take advantage of this entry type. Doing so will most likely result in your submission being rejected.
You can file for this type of entry upon arrival, just prior to its arrival, or up to 15 days before your shipment is due to arrive. However, the earlier you do it, the faster your shipment will clear customs.
From the perspective of customs officials, Entry Type 86 will greatly improve the visibility and, thus, the capability of customs officials to track the sheer volumes of low-value shipments that enter the United States daily.
The automated nature of the Entry Type 86 process also enables Customs officials to focus on more complex and high-risk shipments that may pose a threat to the citizens of the country.
Documents Required for a Section 321: Entry Type 86
Section 321: Entry Type 86 requires precisely ten documents to file for it. The list is as follows:
- Bill of lading or air waybill number
- Entry number
- Planned port of entry
- Shipper name, address, and country
- Consignee name and address
- Country of origin
- Quantity
- Fair retail value
- 10-digit Harmonized Tariff Schedule number (HTSUS Code)
- IOR (importer of record) number of the owner, purchaser, or broker (in the case of PGA shipments such as FDA)
Important Note: HTSUS code classifications are complex, and incorrect classifications in your Entry Type 86 submissions will most likely be rejected, resulting in delays and monetary penalties.
If you are unsure, it’s best to hire experienced customer brokers to do it on your behalf.
Goods Not Eligible for a Section 321: Entry Type 86
Although Entry Type 86 was introduced to ease entry and improve compliance for eCommerce shipments entering the country, it must be noted that certain items are not eligible for this entry type. The exceptions are as follows:
- Goods subject to import quotas: These are goods that have import restrictions enforced on them by the International Trade Commission (ITC) to protect local industries that may be at risk or harmed by the unrestricted import of certain products.
- Goods subject to Antidumping (A.D.) and Countervailing Duties (CVD): The ITC determines that these goods pose a risk to local industries as they are sold below market value or subsidized by their foreign producers. These goods are then subject to additional duties (A.D. and CVD) to protect domestic industries as per the International Trade Administration.
- Goods that are subject to special taxes: This includes certain types of alcohol, tobacco, and firearms that are axed under the Internal Revenue Code.
- Goods regulated by custom’s partner agencies: These include all goods that the following federal agencies regulate:
- U.S. Food and Drug Administration (FDA)
- Food Safety Inspection Service (FSIS)
- National Highway Transport and Safety Administration (NHTSA)
- Consumer Product Safety Commission (CPSA)
- U.S. Department of Agriculture (USDA)
Summing It Up
In the dog-eat-dog world of eCommerce, staying one step ahead of the competition is the key to survival and long-term success. Section 321: Type 86 is a valuable tool importers, or eCommerce sellers, should capitalize on to mitigate any potential compliance violations while getting products delivered to their customers quickly.
If you are an importer looking to take advantage of Entry Type 86 and are looking for a reliable customs broker to help you make the most out of it, look no further than CustomsCity.
We offer a multitude of services for all things customs-related. Sign on for a free trial to experience firsthand what we can do for you.
