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Effect on Revenue
It is estimated that the annual loss of tariff revenue, based upon the current levels of import, would be $200,000.
The Department of Commerce has no objection to enactment of H.R. 4089.
The International Trade Commission submitted an informative
On June 27, 1984, the Subcommittee on Trade ordered H.R. 4089 favorably reported to the full Committee on Ways and Means by voice vote, without amendment.
SUMMARY OF TESTIMONY ON H.R. 4089
Department of Commerce: No objection to enactment.
Introduced by: Mr. McKinney
Date: October 20, 1983
To amend the Tariff Act of 1930 to increase from $250 to $1,250 the value of goods eligible for informal entry, and for other purposes.
Summary of the Provision
H.R. 4178, if enacted, would increase from $250 to $1,250 the value of goods eligible for informal entry.
Section 1 of H.R. 4178, if enacted, would increase the dollar amount which determines whether imported merchandise may be entered by informal entry procedures from the current level of $250 to $1,250. The $250 amount was last increased in 1953 from the previous level of $100 enacted in the Tariff Act of 1930. The increased limit would not apply to "textile goods and products merchandise subject to quantitative import restrictions, articles subject to antidumping or countervailing duties, or any other article for which formal entry is required without regard to value."
Section 2 makes the provision effective after the 15th day after the date of the enactment of this Act.
Background and Justification
All merchandise imported into the customs territory of the United States must be "entered." The entry of that merchandise means that the consignee (or importer, or agent of either) has filed with the appropriate Customs officer the documentation required to secure the release of the imported merchandise from Customs custody. Whereas the formal entry procedure ordinarily requires the services of a customshouse broker, the posting of bonds, a formal appraisement of the merchandise, and the like, the informal entry procedure generally requires no bond, no formal appraisement, and permits the entry documents to be filled out by the importer.
The requirements for making a formal entry are set forth in section 484 of the Tariff Act of 1930, as amended (19 U.S.C. 1484) and part 141 of the Customs Regulations (19 C.F.R. 141). Such entries must be prepared by an importer, or his agent, and must be accompanied by a number of documents such as an invoice, a bill of lading, or a carrier's certificate. The importer is required to obtain a bond and the goods must be appraised and classified by a customs officer, after which the entry is
liquidated. Among the data required on a formal entry for statistical purposes are the 7-digit Tariff Schedules of the United States Annotated (TSUSA) reporting number, countries of origin and exportation, date of exportation, quantities, entered and transaction values, and transportation charges.
Generally, shipments of merchandise valued at $250 or less are permitted to be entered under an "informal entry." An informal entry is one in which documentation requirements are held to a minimum (usually a single brief Customs form), and release of the merchandise is immediate upon payment of any estimated duties and taxes. Section 143.21, Customs Regulations (19 C.F.R. 143.23), sets forth the documentation required for such entries. The informal entry document is usually completed by the importer (or the customs officer for the importer) at the place where the imported merchandise is examined and released by the customs officer (e.g., pier, airport terminal, etc.). There is no formal appraisement of the goods; few supporting documents are required; and the importer is not required to obtain a bond. Whereas detailed statistical data must be provided for formal entries, the Census Bureau no longer compiles import statistics on informal entries directly from the forms filed by importers with the Customs Service. These forms are no longer sent to the Census Bureau. The Census Bureau now estimates data on informal entries based on the preceding year's entered values.
Legislation to increase the threshold for informal entries has been offered several times in recent years. Extended discussion of a similar proposal occurred during consideration of the Customs Procedural Reform and Simplification Act of 1978 when the proposal was deleted from the bill as reported by the Committee on Ways and Means. At that time, the U.S. Customs Service and other proponents of the change argued that passage of time coupled with the increase in inflation made the 1953 level of $250 unrealistically low. They further argued that the cost to the government of formal processing for entries valued between $250 and $1,000 outweighed any benefits (e.g., additonal duty collections) derived from the formal entry process.
On the other hand, it was argued that the proposed increase in the value limitation would undermine enforcement of various import restrictions (e.g., the textile and apparel import program), and create greater risk of circumvention of these restrictions as well as other customs regulations. The fear was expressed that under the revised value criteria, it would be possible for sizable shipments of "uncontrolled" imports to disrupt the U.S. market and still enter undetected by import monitoring programs.
Data for low-valued entries (i.e., entries valued at $250 or less) are not reported in the same detail, nor with the same frequency, as data for entries valued over $250. However, the Census Bureau has published estimates of U.S. imports valued at $250 or less through 1981. The Commission has tabulated those TSUS items in which low-valued entries totaled more tha $750,000 during 1980 and 1981.
In 1980, more than 75 TSUS items were reported by the Census Bureau as having at least $750,000 in low-valued entries. The aggregate value of the low-valued entries classified in these 75 items was in excess of $263 million. Thus, for example, lowvalued entries classified in TSUS item 790.30 (harness, saddles and saddlery, and parts thereof) totaled more than $6.6 million in 1980. However, formal entries for this item in 1981 totaled more than $11.7 million.
Comparison with Present Law
Currently, formal entries are required on all shipments valued in excess of $250.
Effect on Revenue
This proposal does not directly affect the collection of customs revenues. The dutiability of imported merchandise will be unaffected by this legislation; however, it is believed that, the government could achieve significant savings in processing costs if entries valued between $250 and $1,500 are qualified for the lower-cost informal entry procedure.
The Department of Commerce has no objection to enactment of H.R. 4178 provided that the value of goods eligible for informal entry is reduced from $1,500 to $1,000 which is similar to the Senate version.
The International Trade Commission submitted an informative report.
On June 27, 1984, the Subcommittee on Trade ordered H.R. 4178 favorably reported to the full Committee on Ways and Means by voice vote, with amendments changing the proposed increased ceiling for informal entries from $1,500 to $1,250 and more specifically defining the excepted articles for which the $250 ceiling would be maintained to be all articles classified in schedule 3, specified parts of schedule 7 and parts 2 and 3 of the Appendix to the TSUS. A technical amendment was also adopted changing the effective date to 15 days after date of enactment.
The Subcommittee understands that the Census Bureau will continue to compile and report statistics on excepted products valued over $250 in the same way and with the same frequency as the Bureau currently does for commodities reported on formal import documents.
SUMMARY OF TESTIMONY ON H.R. 4178
Department of Commerce: No objection to enactment of
Congressman Stewart McKinney: The Senate Finance Committee reported favorably a bill similar to H.R. 4178 with amendments to address the concerns of groups initially opposed to informal entry. The amendments adopted in the Finance Committee are not expected to cause any controversy with regard to the House version.
Air Freight Association: Enactment of this bill would encourage an expansion of international trade and improve the efficiency of the U.S. Customs Service.
Enactment of this
Air Transport Association of America: bill would reduce the cost of paperwork associated with importing merchandise, improve Customs Service productivity with resulting savings, and facilitate and encourage international trade.