H318461

90 K Street N.E., Washington, DC 20229 U.S. Customs and Border Protection August 25, 2022 HQ H318461 BRO-1; 3-05 OT:RR:CTF:ER H318461 SMS Herbert J. Lynch, Esq. Sullivan & Lynch, P.C. 800 Turnpike Street, Suite 300 North Andover, MA 01845 Re: Request for a binding ruling regarding Customs broker relations with unlicensed persons Dear Mr. Lynch: This is in response to your letter dated April 29, 2021, submitted on behalf of your client, World Customs Brokerage (“WCB”). You inquire whether WCB may enter a business relationship with a freight forwarder, World Courier, Inc. (“WCI”), that is not a customs broker, within the regulations regarding Customs broker relations with unlicensed persons, under 19 C.F.R. §§ 111.24 and 111.36. FACTS: WCB is a licensed Customs Brokerage and a subsidiary of AmerisourceBergen Corporation (“ABC”), a healthcare solutions organization. You explain that occasionally, importers are referred to WCB by WCI, an affiliate company within ABC, who specializes in logistics and freight forwarding. All importers referred to or who directly engage with WCB are required to execute a Customs Power of Attorney (“POA”) and acknowledge receipt of WCB’s Terms and Conditions of Service. Included in the POA is a provision “whereby the client Importer specifically consents to the disclosure to the freight forwarder of records and information deemed confidential.” WCB’s proposed POA does not identify WCI by name, but merely by executing the POA the importer agrees that WCB can invoice a freight forwarder for services rendered to the importer and share records with it pertaining to the import transactions. Specifically, the proposed POA states: Where the grantor is being billed for brokerage services through a freight forwarder, the grantor acknowledges that it is World Customs Brokerage and not the forwarder who is conducting Customs business; In addition, by executing this power of attorney, the grantor acknowledges that all of World Customs Brokerage’s fees and expenses may be billed and collected by the forwarder and the grantor waives any requirement that an invoice or statement of the brokerage charges be sent directly by World Customs Brokerage to the grantor; nothing here in shall be construed as preventing the grantor from directly communicating with World Customs Brokerage; Grantor further acknowledges that records pertaining to the grantor’s import transaction can be disclosed by World Customs Brokerage to the grantor’s freight forwarder and/or provided the grantor through its freight forwarder. You further explain that the exchange of “all information and communications necessary to prepare and file the Entry and Entry Summary takes place between WCB and the Importer.” In some instances, after calculating customs duties and fees owed on an importation, WCB invoices WCI for the duties and fees owed by the importer client. WCI “does not calculate the Customs duties and fees.” WCI collects the duties and fees from the importer and remits them to WCB. WCB then pays U.S. Customs and Border Protection (“CBP”) the duties and fees due on the entry. Under the agreement, importers may also make payment to CBP directly. On September 17, 2021, Regulations and Rulings asked for clarification regarding this arrangement. On September 29, 2021, counsel for WCB elaborated on the business relationship and explained that WCI introduces the importer to WCB, at which time WCB will correspond with the importer and obtain a POA and other information necessary, directly from the importer. Therefore, WCI informs the importer that WCB will be the broker performing the customs business. Counsel also provided WCI’s Conditions of Carriage, which it provides to its customers, and includes a provision on Customs Brokers. You explain that while WCI does not require a POA from its customer, it does require its customers agree to the Conditions of Carriage which states if the shipper customer has not already appointed a broker, it appoints WCB or a third-party broker, selected by WCI to act as its agent. You seek confirmation whether, under this arrangement WCB is authorized under 19 C.F.R. §§ 111.24, 111.29, and 111.36, to share confidential information with the freight forwarder; invoice the freight forwarder for duties, fees, and WCB expenses; and receive payment from the freight forwarder. You specifically inquire: 1) Does WCB’s POA satisfy the written consent and waiver requirements of 19 C.F.R. §§ 111.24 and 111.36(c)(2)(i); 2) must the name of the freight forwarder be identified in the POA; 3) and is there a requirement that WCB receive funds for the payment of Customs duties directly from the importer. ISSUES: Whether a Customs Broker must receive Customs duties directly from the importer. Does WCB’s POA satisfy the written consent and waiver requirements of 19 C.F.R. §§ 111.24 and 111.36(c)(2)(i). LAW AND ANALYSIS: Whether a Customs Broker must receive Customs duties directly from the importer. Section 641(b)(1) of the Tariff Act of 1930, as amended (19 U.S.C. § 1641(b)(1)), provides that no person may conduct customs business (other than solely on behalf of that person) unless that person holds a valid customs broker’s license. The regulatory definition of “customs business,” which closely follows the language set forth in 19 U.S.C. § 1641(a), is provided in 19 C.F.R. § 111.1 as: those activities involving transactions with CBP concerning the entry and admissibility of merchandise, its classification and valuation, the payment of duties, taxes, or other charges assessed or collected by CBP on merchandise by reason of its importation, and the refund, rebate, or drawback of those duties, taxes, or other charges. “Customs business” also includes the preparation, and activities relating to the preparation, of documents intended to be filed with CBP in furtherance of any other customs business activity, whether or not signed or filed by the preparer. However, “customs business” does not include the mere electronic transmission of data received for transmission to CBP and does not include a corporate compliance activity. 19 C.F.R. § 111.1. As explained in Headquarters Ruling (“HQ”) H258556, dated September 6, 2017, to comply with the statutory and regulatory requirements, while an intermediary may collect funds from the importer and forward to the broker, only a licensed broker or the importer of record may tender the payment to CBP. While we explained that a person may assume the liability for duties owed by another person, such a transaction must still be structured in a manner where only the customs broker or importer of record tenders the payment to CBP. Additionally, as the payment of duties to CBP amounts to customs business per 19 C.F.R. § 111.1, a freight forwarder’s intermediary role in the importer’s payments of duties to CBP must not amount to “active participation in decisions and activities” relating to these payments. H258556 (Sept. 6, 2017). In H258556, we found a freight forwarder was allowed to collect fees from the importer for forwarding to the broker. This payment arrangement was permissible because the licensed broker determined the amount of duty, the freight forwarder provided the importer a single bill, including the amount owed to CBP, which, after collection from the importer, the freight forwarder would then forward to the broker for payment to CBP. Id. Here, like in H258556, we find that it is permissible for a broker to allow an intermediary freight forwarder to collect payment from the importer, if the freight forwarder does not remit the payment to CBP directly, nor participates in decisions relating to those payments. Specifically, as a freight forwarder or any unlicensed entity is precluded from conducting customs business, under 19 C.F.R. § 111.4, WCI may not actively participate in the customs decisions, calculation, or remittance of customs payments to CBP. Accordingly, WCB’s proposed payment transaction is permissible as the

Whether a Customs Broker must receive Customs duties directly from the importer.Section 641(b)(1) of the Tariff Act of 1930, as amended (19 U.S.C. § 1641(b)(1)), provides that no person may conduct customs business (other than solely on behalf of that person) unless that person holds a valid customs broker’s license. The regulatory definition of “customs business,” which closely follows the language set forth in 19 U.S.C. § 1641(a), is provided in 19 C.F.R. § 111.1 as: those activities involving transactions with CBP concerning the entry and admissibility of merchandise, its classification and valuation, the payment of duties, taxes, or other charges assessed or collected by CBP on merchandise by reason of its importation, and the refund, rebate, or drawback of those duties, taxes, or other charges. “Customs business” also includes the preparation, and activities relating to the preparation, of documents intended to be filed with CBP in furtherance of any other customs business activity, whether or not signed or filed by the preparer. However, “customs business” does not include the mere electronic transmission of data received for transmission to CBP and does not include a corporate compliance activity. 19 C.F.R. § 111.1. As explained in Headquarters Ruling (“HQ”) H258556, dated September 6, 2017, to comply with the statutory and regulatory requirements, while an intermediary may collect funds from the importer and forward to the broker, only a licensed broker or the importer of record may tender the payment to CBP. While we explained that a person may assume the liability for duties owed by another person, such a transaction must still be structured in a manner where only the customs broker or importer of record tenders the payment to CBP. Additionally, as the payment of duties to CBP amounts to customs business per 19 C.F.R. § 111.1, a freight forwarder’s intermediary role in the importer’s payments of duties to CBP must not amount to “active participation in dec