Customs Broker

Definition

A customs broker is a person or firm licensed by U.S. Customs and Border Protection to file customs entries and conduct customs business on behalf of importers. The broker is responsible for the accuracy of the filings they submit.

Why it matters

Many freight forwarders are not licensed customs brokers and outsource entry filing, while still preparing the data. The filer of record carries regulatory responsibility, so the review step is not optional.

Licensing and the power of attorney

A U.S. customs broker must be licensed by CBP. Individuals sit for the CBP broker examination, which tests classification, valuation, country of origin, and entry procedure knowledge. Licensed brokers operate under a power of attorney (POA) from the importer, which authorizes them to transact customs business on that importer's behalf. The POA is a legal document, and acting outside its scope, or submitting entries for a party without one, creates liability for the broker. Every broker engagement starts with a signed POA.

What the broker is responsible for

The broker is responsible for the accuracy of the information on the customs entry at the time of filing. This includes the HTS classification, declared value, country of origin, and any applicable trade program claims such as duty drawback or free trade agreement preference. If an entry is filed with a wrong classification or understated value, CBP can assess additional duties and penalties at liquidation. The broker's liability depends on whether the error was caused by information the importer provided versus a broker judgment call. Inaccurate instructions from the importer do not eliminate broker liability if the broker should have caught the error.

The freight forwarder and broker relationship

Many freight forwarders hold both an FMC license (for forwarding) and a CBP license (for customs brokerage), or operate in partnership with a licensed broker. When the forwarder is not the licensed broker, the forwarder typically prepares the ISF and gathers the entry data, then hands it off to the broker for review and submission. The broker is the filer of record in CBP's ACE system. This separation of preparation and submission is where data accuracy is most important: the broker can only review what the forwarder sends, and a forwarder who sends clean, source-attributed data reduces the broker's correction cycle and speeds clearance.