To explain U.S. Customs & Border Protection’s (CBP) simplified entry proposal it is probably necessary to review how entries are usually done. The current entry procedure, which has been around for some 40 years, is a two-step process. It starts with CBP form 3461 in hard copy or electronic form. Form 3461 is used to report the shipment and obtain release. The importer or its broker then has 10 business days to complete and file a CBP form 7501 in hard copy or electronic form to calculate the duties, taxes and fees, report the statistical data and pay all amounts due. Some of the information on form 7501 is the same as what is reported on the 3461. This process is repeated every time an entry is made.

If CBP and the trade community want to move to a more efficient clearance method that allows payment of duty and collection of statistics on a periodic basis, something better needs to be devised. That is what simplified entry is about.

Customs & Border Protection’s goals for simplified entry are to allow enforcement and security, collect revenue, and gather trade statistics. The goals on the importer side are to reduce the cycle time, eliminate duplication, and permit duty payment on a periodic (such as once a month) basis. It is also believed that simplified entry could facilitate account-based management.

With these goals in mind, CBP and the trade community got together in 2011 to begin creating a better entry method. After announcing their proposed method on Sept. 30, 2011,CBP then sought importers and brokers who could try out it out. The importers had to be C-TPAT Tier 2 or 3 participants, have an ACE Portal account and a continuous bond. Ten importers meeting these criteria were selected. Ten customs brokers who worked with the selected importers were also selected for the pilot. Initially, only air freight shipments having no other government agency requirements would be candidates for the pilot.

Simplified entry involves electronically submitting 12 data elements to CBP before the cargo departs from the country of export. These 12 elements include:

  • Importer of record number
  • Buyer name and address
  • Consignee IRS number
  • Seller name and address
  • Manufacturer/Supplier name and address
  • 10-digit HTS
  • Country of origin
  • Master and house air waybill
  • Air waybill issuer code
  • Entry number
  • Entry type
  • Estimated entered value

There are also three optional data elements ship to party name and address; consolidator name, and container stuffing location.

The pilot officially started on May 29, 2012 ,and the first entries occurred right after that. Under the pilot, the shipments obtain cargo release at the “wheels-up” point, meaning they are cleared when the shipment arrives. The entry summary is made in ACE and payment of duties, taxes, and fees is on a monthly basis. The goal is that revenue collection will be account based and decoupled from release of the cargo. This part of the pilot is still under development and will need the most work.

In August, CBP announced it was expanding the simplified entry pilot. Initially, simplified entry was limited to three airports, but in August more were added and the plan is to expand further. CBP is also planning to add new capabilities to simplified entry, including:

  • Participating Government Agency message set – opening the potential for shipments subject to other government agency requirements to be processed;
  • A simplified entry transaction set;
  • The capability to accept single transaction bonds; and
  • Document imaging

CBP hopes to add Remote Location Filing to the pilot in the future. CBP will also add more eligible airports and expand the pilot to ocean and surface freight.

The first test phase of the simplified entry pilot began on Dec. 31, 2011 and is expected to run for two years. During that time the relevant sections of Parts 141 and 142 of the Customs Regulations are suspended for eligible participants. The pilot will obviously undergo some corrections and improvements during the initial test phase. It is a big step in the right direction and very likely the way of the future, but may need federal legislation to make it official and to change the existing regulations. We can hope that happens, but we are not optimistic.