Some years ago, when I was the export-import manager at an aerospace company, I sent a customs broker power of attorney on Customs Form 5291 to the Corporate Secretary for execution. She called me soon thereafter to ask “do we really want the customs broker to do all these things?” The CF5291 is printed in a very small size font and uses some archaic and difficult to read language. The CF5291 power of attorney authorizes a customs broker to make entry on behalf of the importer, plus a number of other things, such as endorse bills of lading, sign bonds, make other declarations, receive and endorse checks and appoint subagents. The Corporate Secretary posed a good question and caused me to take a close look at the form and all the verbiage on it.
Let’s start out with a short description of how a power of attorney is used. The party qualifying as importer of record for an import shipment can prepare and file its own entries, make declarations, sign documents, etc. No power of attorney or customs broker license is needed. If the importer of record chooses not to do these things it must appoint an agent to act on its behalf. That agent must be a licensed customs broker and must be authorized by a power of attorney granted in its favor.
Customs Form 5291 is normally used to appoint a customs broker – but that particular form is not mandatory. Any form containing the required information will serve the purpose. So – what information is required? Here are some of the major things a valid Customs power of attorney must contain:
- The legal name and address of the importer of record, who is the grantor on the power of attorney, along with its IRS number and state of incorporation
- The legal name and address of the customs broker, usually followed by wording such as “through its licensed officers, authorized employees and agents”
- The ports in which the customs broker is appointed to act as agent for the importer
- The period of validity of the power of attorney
- A description of what acts the customs broker is authorized to perform on behalf of the importer. This can be limited to just filing entries or preparing drawback claims, or can be made very broad to include appointing subagents, signing bonds, and preparing Electronic Export Information filings. The choice is really up to the importer.
Those are the basic requirements. You can use the complete CF5291, a modified version of the CF5291, or create your own power of attorney – as long as it contains the required information.
The power of attorney must be executed (that means “signed”) by an officer of the importer of record. This usually means the President, Vice-President, Secretary or Treasurer. These positions are normally empowered to bind or obligate the corporation. What about an Assistant Secretary or Traffic Manager or Compliance Officer? The power of attorney can possibly be executed by any of these individuals, provided they have been authorized in writing by the Corporation to execute instruments such as powers of attorney. The bottom line here is to make sure the person signing the power of attorney has the authority to do so on behalf of the corporation.
What if it isn’t a corporation? A power of attorney issued by a sole proprietorship (a company owned by an individual) must be signed by the owner. A power of attorney issued by a partnership must be signed by one of the partners.
Does the power of attorney need to be notarized or witnessed or bear the corporation seal? The short answer is no – as long as it has an original signature by an authorized person it is valid. However, it may be a good idea to have one or more of these things done. The corporation seal, notarization or a witness signature lend authenticity to the document. In these days of importer identity theft and other fraudulent goings-on, having an original, legal, validated document is always a good idea.
As mentioned above, a customs broker power of attorney must specify the period of validity. Many powers of attorney simply say “until revoked.” That may not be a good idea. A power of attorney worded in that way can be valid indefinitely – long after the current people at the importer and customs broker have retired or gone on to other things. A better idea is to make a power of attorney valid for a specific period of time, such as three years. The best idea is to have a written contract with the customs broker, setting forth services, reports and fees, and make the power of attorney valid for the same period as the contract. If nothing else, these will force the importer and broker to periodically examine their relationship and scope of services.
When completing the part of a power of attorney specifying the ports in which the broker can act for the importer, many importers simply put “all,” meaning that the power of attorney is valid anywhere in the country. If it is a national customs broker or one performing clearances in multiple ports and doing remote filing on behalf of the importer, this is probably a good idea. If this is not the case, the power of attorney should specify by name and/or number those ports in which it wants to broker to perform customs business on its behalf.
This brings up the subject of subagents. Many powers of attorney, including the CF5291, authorize a broker to appoint subagents. This can be a useful tool, but needs to be controlled. What is a subagent? Suppose an importer receives all its shipments through New York and has appointed a customs broker in that port. One day the importer receives a shipment through Miami. The New York broker does not have an office in Miami. What to do? The shipment could be moved in bond to New York and cleared there – but what if it is a drop shipment and intended to stay in Florida? It could be cleared my remote filing if eligible (many things aren’t). The importer could conduct a search and appoint a customs broker in Miami. That takes a while and the shipment sits until the selection is complete. Or the New York broker could appoint a customs broker in Miami to act as broker for the importer under the subagent authority in the power of attorney. This is both handy and efficient. The main difficulty is knowing that the New York broker has done this and getting copies of the subagent power of attorney and entry documents. Placing proper controls on use of the subagent authority is something that should be included on the power of attorney and written contract. (“Grantor hereby authorizes grantee the authority to appoint subagents, providing Grantee advises Grantor in advance of the subagent to be appointed and provides Grantor with all associated documents, including powers of attorney, entry documents and declarations.”)
What if the importer of record has wholly owned subsidiaries? Will the power of attorney cover them also? No it won’t. In the eyes of the law separately incorporated subsidiaries are separate companies and must issue their own powers of attorney. One strategy I have employed in the past is to issue a power of attorney in the name of the parent company and executed by one of its officers, then attach an addendum listing the separately incorporated subsidiaries that will be using the same customs broker. For each subsidiary the addendum lists their full legal name and address, their state of incorporation, and IRS number. An officer of each subsidiary signs the addendum under the company information and his/her signature is witnessed or sealed. This sounds like a lot of effort, but it is valid and easier than issuing a handful of separate powers of attorney.
After the power of attorney is complete and executed, the original goes to the customs broker. The importer should keep a copy in a tickler file so they will know where it is and can start the renewal process (if desired) before it expires. The original copy sent to the broker should be sent by registered mail or express courier, so that the importer will have evidence the broker received it.
Sometimes a customs broker needs the power of attorney immediately because a shipment is pending clearance and time is of the essence. In such cases the importer can send a facsimile or imaged copy to the broker but the original should follow as soon as possible.
I started by telling of how the Corporate Secretary questioned the CF5291 power of attorney. What we wound up doing is discovering that the National Customs Brokers and Freight Forwarders Association (NCBFFA) had a model power of attorney. We like the NCBFFA’s version much better because it used more straightforward language (none of the “know all men by these presents” stuff) and could be customized to specify exactly what we wanted the broker to do for us. We used that version from that point forward.