Importing: Formal vs. Informal Entry

Informal entries cover personal shipments, commercial shipments and mail shipments that are being entered for consumption, i.e. for use or sale. In most cases informal entry can be used if the merchandise is valued at $2000 or less. There are some exceptions such as textiles, certain types of footwear and other goods subject to quota/visa restrictions. Personal shipments valued over $2000 will also require a formal entry. The difference between an informal entry and a formal entry is the bond requirement and the liquidation process. Liquidation is the final computation of duties or drawback accruing to an entry and is the final step in the entry process.

Formal entries are generally commercial shipments supported by a surety bond to ensure payment of duties and compliance with Customs requirements. A bond is like an insurance policy that is payable to Customs in the event that the importer does not comply with import requirements. Having a bond on file, allows an importer to take possession of his merchandise before the payment of duties, taxes and fees. Bonds can be obtained from a surety, which is an insurance company that has been authorized by the Treasury Department to write Customs bonds.

A port director can require a formal entry for any importation if he or she deems it necessary for the protection of the revenue or for admissibility or enforcement issues.

Goods admitted as informal entries do not require the posting of a bond and goods are liquidated on the spot. After the importer receives notification of the arrival of merchandise from the carrier and it is determined that all shipping charges are satisfied an invoice is presented to Customs. When an informal entry is being made, the inspector, not the importer, is responsible for determining the classification number of the goods being imported. The inspector also completes the Customs forms used for informal entry.

Formal Entry of Goods
To make or file a consumption entry (for imported goods going directly into the commerce of the United States without any time or use restrictions placed on them) the following documents are generally required:

  1. A bill of lading, airway bill, or carrier's certificate (naming the consignee for customs purposes) as evidence of the consignee's right to make entry.

  2. A commercial invoice obtained from the seller, which shows the value and description of the merchandise.

  3. Entry manifest (Customs Form 7533) or Entry/Immediate Delivery (Customs Form 3461).

  4. Packing lists, if appropriate, and other documents necessary to determine whether the merchandise may be admitted.

When a consumption entry is filed, the importer indicates the tariff classification and pays any estimated duty and processing fee. A surety bond containing various conditions, including a provision for paying any increased duty that may be found to be owed at a later date, may also be required.

Other Types of Entry
Imported goods may be sent in-bond from the first port of arrival to another Customs port. In-bond entries postpone final Customs formalities including payment of duty and processing fees, until the goods arrive at the final port. Arrangements for in-bond shipments should be made before the goods leave the country of export.

Imported merchandise may also be sent to a bonded warehouse under a warehouse entry. Duties and processing fees are not paid on warehoused merchandise until the goods are withdrawn for consumption. Storage fees are paid to the warehouse proprietor by the importer.

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