Ecommerce has exploded in recent years with growth trending upwards in many regions despite and because of the COVID-19 pandemic. Higher de minimis thresholds for imports in Mexico and Canada as well as new customs regulations that ease the flow of ecommerce shipments are also driving this growth. To support traders and expedite the release of ecommerce goods while securing borders, U.S. Customs and Border Protection (CBP) recently extended the coverage of Section 321 or low-value shipments entering the country with Entry Type 86. Below are what importers need to know about Section 321 Entry Type 86.
What is Section 321 Type 86?
Entry type 86 is an extension of Section 321 of the Tariff Act of 1930, which essentially allows low-value goods to enter the U.S. free of tax and duty and without a formal entry. To be eligible for Section 321 release, the merchandise must be valued at $800 or less and imported by one person per day. Most ecommerce goods are Section 321 shipments, allowing importers to clear their parcels quickly and cost-effectively.
In the past Section 321 release only applied to shipments in the highway and air modes of transport and to unregulated shipments that do not require permits or certificates from Partner Government Agencies (PGAs). Entry type 86 now covers low-value shipments in all modes of transport, including those regulated by PGAs. Exceptions include alcohol, tobacco, agricultural products, quota goods, and goods subject to countervailing/antidumping duties.
Most online sales can be released as entry type 86. However, CBP reserves the right to require filers to clear shipments under a formal entry in certain cases for admissibility, enforcement, and other purposes.
What is the goal of Section 321 Type 86?
Section 321 type 86 aims to address issues associated with the ecommerce boom. With the sheer volume of low-value shipments entering the country every hour, entry type 86 helps CBP and PGA officials identify high-risk and illicit goods and plan for their movement, while at the same time accelerating the processing of legitimate shipments to support the trading community.
Section 321 entry type 86 allows online sellers and importers to get parcels to their customers faster and without incurring additional fees. It streamlines the clearance process, improves visibility into current and historical shipment data, and improves data accuracy.
CBP requires the importer of record or licensed customs brokers acting on their behalf to file entry type 86. In contrast, the paperwork required for the normal Section 321 release can be filed by multiple parties, including the importer, consignee/owner of the shipment, broker, and carrier.
Customs brokers must be designated by the importer/consignee to submit documentation to CBP via a Power of Attorney. Brokers must submit data to CBP via the Automated Broker Interface (ABI) in the Automated Commercial Environment (ACE). Brokers can set up their own ABI connection with CBP via Electronic Data Interchange (EDI) or use CBP-approved third party software.
The filer must submit the following information to CBP before the shipment arrives or upon arrival but no later than 15 days after the cargo arrives at the port of entry:
Bill of lading or air waybill number
10-digit HTSUS code
Country of origin
Importer of record number of the broker, purchaser or owner when designated by a consignee
Shipper name and address
Consignee name and address
Fair retail value of the goods in the country of shipment
Planned port of entry
Is it mandatory to submit an Entry Type 86 filing?
Entry type 86 is currently under testing and is voluntary. Importers and brokers can still clear ecommerce shipments the usual way through the release on manifest process. Online retailers and traders that move large volumes of ecommerce goods should take advantage of type 86 entry to clear shipments quickly and fast track deliveries to customers.
What’s an HS code?
The Harmonized System (HS) is a system of tariff classification used by customs authorities in over 190 countries to determine tariffs and fees, control restricted goods, and manage risk. The first six digits of the code are the same in all countries while the remaining digits are unique to each country.
The Harmonized Tariff Schedule of the United States (HTSUS) code is mandatory when submitting paperwork for clearance of Section 321 entry type 86 shipments. Shipments with the wrong code can be delayed or even rejected.
Are some goods not qualified to take advantage of a Section 321 Type 86 filing?
Yes, some goods are not eligible for release as Section 321 entry type 86. These include merchandise valued at $800 or more, quota goods, goods subject to CVD/AD, goods that require any CBP fees, and tobacco, alcohol, and agricultural products regardless of value.
Pros and Cons of Entry Type 86
The entry type 86 release option is significantly simpler and faster than the usual Section 321 process. Ecommerce shipments can be delivered to the customer immediately upon arrival provided that CBP has the shipment information in advance. More types of merchandise are eligible, including shipments in all modes of transport and those regulated by PGAs.
In addition, importers don’t need to pay a fee like they normally would when clearing goods via an Express Carrier Consignment Facility (ECCF). Whether you are a high-volume importer or small/midsize business, you can save money while speeding up the release and delivery of ecommerce shipments.
The biggest downside to entry type 86 is the HTSUS code requirement. HS code classification is a complex process best left to customs brokers. If you are an importer self-filer, HS classification can take up huge amounts of time. Submitting inaccurate codes, even if accidental, can mean delayed shipments and monetary penalties that could wipe out your bottom line.
Also note that volume restrictions apply to entry type 86 releases. For highway carriers, single trips should have no more than 100,000 shipments in an ACE eManifest. Carriers can still file multiple truck trips (split shipment) for a single crossing. For ocean carriers/NVOCCs, master bills should be limited to no more than 10,000 related house bills. Both ocean and air type 86 entries should be limited to a maximum of 30,000 per hour.
Using Section 321 Type 86 Filings to Grow your Business
Section 321 entry type 86 gives online retailers and traders the perfect opportunity to grow their ecommerce business. Now you can speed up the release process for ecommerce goods and move PGA-regulated low-value shipments much more quickly. Entry type 86 does require an extra step with the HS code requirement, but the right partner can help automate the process along with customs paperwork.
If you find HTSUS classification and entry type 86 submission daunting, a third-party provider like Global eTrade Services (GeTS) can help. GeTS eCommerce Managed Services allows importers, brokers, freight forwarders, and logistics providers to automate Type 86 and ACE customs reporting with CBP. The service includes scaling technology, brokerage assistance, CFS, and logistics arrangements. GeTS also offers automated shipment clearance, airport ground handling, and deconsolidation for last mile deliveries.
As a GeTS eCommerce Managed Services subscriber, you get cutting edge technology and automation that enables scaling of your business without increasing costs, obtain release of goods within 24 hours from cargo arrival, and overcome cross-border challenges with 24/7 expert assistance from our team of professionals.
Learn more by visiting our Section 321 Entry Type 86 page or contact us today!
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