Thursday, April 23, 2009

Is It Time To Increase Informal Entry Amount?

Recently, members of the newly organized Express Association of America made a request to CBP to increase the current informal entry amount as well as the §321 (de minimis) amount for express couriers. This proposal has numerous potential benefits and very few drawbacks. Some of the benefits include the ability to:

· Redirect CBP resources to focus on security related issues and other high-risk areas.
· Improve productivity for both the trade and CBP.
· Subject fewer shipments subject to time-consuming process of formal entry.
· Reduce paperwork.
· Expedite delivery.
· Reduce MPF payments for shipments (other than express courier) currently falling in the $2,000 to $2,500 range.

Although a small benefit for the trade, the one potential drawback for CBP would be reduced collection of Merchandise Processing Fees. For shipments entered by parties other than express couriers, informal entries are subject to a cap of $2 per entry, whereas the MPF on a $2,000 entry would be $25. Thus, CBP would lose $23 per entry for those entries currently falling between $2,000 and $2,500. Informal entries processed by express couriers are subject to different calculations based on the number of air waybills in 19 CFR 24.23(b). To measure the potential for lost revenue for other shipments, CBP would need to determine how many entries fall within that range and multiply that number times $23. To determine the costs and benefits, CBP would need to take that loss of MPF revenue and weigh that amount with the ability to redirect resources, increased productivity due to reduced investment of time and other potential benefits.

Why wouldn’t CBP want to grant this request? By law, CBP has the authority to do so. As part of the Customs Modernization Act, Congress gave CBP the authority to increase the informal entry amount from $1,250 to $2,500; however, CBP only increased the amount to $2,000 in 1998. According to the Bureau of Labor Statistics Inflation Calculator, an article that cost $2,000 in 1998 would cost $2,609.93 in 2009. Thus, raising the informal entry limit to $2,500 would help bring the amount in line with inflation that occurred since the limit was last increased in 1998.

Maybe other trade associations should join the EEA and make their wishes known. Since the government is providing stimulus funds to financial institutions and other types of businesses, perhaps this could be the government’s stimulus contribution to the trade.

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