Brokers and Importers Beware – CBP Implements New Power of Attorney (POA) Requirements

October 31, 2022

Recently, U.S. Customs and Border Protection (CBP) released its long awaited changes to Part 111 of the Customs Regulations regarding customs brokers. These changes have a significant impact on how licensed customs brokers organize their business relationships with CBP, importers and freight forwarders. The new rules are effective December 19, 2022. 

Section 141.31 of the Customs Regulations requires a broker to have a Power of Attorney (POA) in order to engage in “customs business” on behalf of an importer or drawback claimant. A POA is a written statement legally authorizing a person to act for another. The person granting the authority is known as the principal or grantor (importer of record or drawback claimant), while the person being authorized to act is the agent or grantee (broker). The language should indicate that the principal is granting authority to the broker to act as the principal’s agent for transacting customs business. 

“Customs business” means 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 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 and/or the electronic transmission of documents and parts of documents intended to be filed with CBP in furtherance of any other customs business activity. Only a licensed customs broker is permitted to conduct customs business on behalf of an importer or drawback claimant.  See 19 CFR 111.1.

Revised CFR section 111.36 provides that brokers must now execute a POA directly with the importer or drawback claimant without going through a third-party intermediary such as a freight forwarder before transacting customs business on behalf of an importer or drawback claimant. In other words, there is no grandfathering, and the POA must be executed directly between the client and the broker. After the effective date of the new regulations (December 19, 2022) existing POAs authorized by a forwarder or other party on behalf of an importer will no longer be valid for the purpose of the broker transacting customs business. A broker must obtain new POAs from existing clients if the current POA is issued by the forwarder or other party.

The new requirement for brokers to execute a POA directly with a client does not prohibit a broker A-broker B relationship. A client may authorize its broker (broker A) to allow another broker (broker B) to transact any portion of the customs business conducted on behalf of the client when the original POA provides for such.

A POA must be issued by a person empowered to enter into such an agreement. In the case of corporations, this is typically the president, CEO, or legal secretary of the corporation. Other individuals may sign a POA for the broker to transact customs business on behalf of the importer corporation, but they must establish that they are authorized and empowered to do so. Brokers are also expected to validate the bona fides of the individual and company to ensure that there is no identity theft or other malfeasance.  See https://www.cbp.gov/trade/programs-administration/customs-brokers/validating-power-attorney.

For additional information on this or other Customs matters, contact George R. Tuttle, III at geo@tuttlelaw.com or (415) 288-0428, or visit our website or Linkedin profile.

 

The information in this article is general in nature and is not intended to constitute legal advice or to create an attorney-client relationship with respect to any event or occurrence and may not be considered as such.

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