Who Counts as a ‘U.S. Importer’? CBP’s New Rule Redraws the Line and Gives Foreign IORs 60 Days to Find a CTPAT Path

The IFR will have significant ramifications for many US importers with foreign ownership or that may now be considered foreign as well as those that have traditionally relied on the non-resident importer program. The IFR implements Section 2 of the June 3 Executive Order (EO) 14411, Strengthening Customs Enforcement. The IFR’s requirements take effect January 5, 2027, and CBP is soliciting comments on the rule through that date. 

The IFR makes three significant changes: 

1. Defines “U.S. importer of record.” By applying one of two tests (e.g., beneficial owner/control or real property ownership). Every other importer of record (IOR) will be considered a “foreign IOR.” US incorporation, being “located” in the United States, or having a US address on CBP Form 5106 will no longer be enough to qualify as a US IOR. The net effect is that many US subsidiaries of foreign-owned holding companies may be treated as foreign IORs once the IFR takes effect. 

2. Customs Trade Partnership Against Terrorism (CTPAT) Requirement. Bars foreign IORs from importing goods into the US unless they are validated under the CTPAT program or designate a CTPAT-validated licensed customs broker. Today, only non-resident Canadian importers are currently eligible for CTPAT importer validation; all other foreign IORs will generally need a CTPAT-validated broker.  

3. US IOR Declaration Requirement. Requires every IOR, or its broker, to declare whether an importer has US IOR status upon entry. Brokers are required to verify that status.  

Why this Matters. On its own, the IFR’s far-reaching impact may not be readily apparent. For most foreign IORs, the most immediate change will be to move to a CTPAT-validated broker. But the IFR is only one piece of the broader Customs Enforcement EO, and many of the EO’s directives have not yet been implemented, including the ban on informal entry, minimum asset and bonding requirements, higher penalty floors, a “good standing” standard, and enhanced vetting. Importers classified as foreign IORs under the IFR should expect those future actions to fall most heavily on them. This classification also carries real consequences now: inaccurate US IOR declarations can lead to live entry requirements, loss of immediate delivery privileges, and penalty exposure. Brokers facing heightened penalties are likely to become more cautious and more expensive for foreign IOR clients. 

Brokers may request delayed compliance with the new verification obligation, but all brokers must fully comply by May 6, 2027. Because the rule was issued without prior notice and comment, the trade community only has roughly 60 days to prepare. CBP has issued a reference guide, a pre-recorded webinar, and, on November 10, updated FAQs on its Strengthening Customs Enforcement page. 

In our June 4 alert, we analyzed EO 14411, and in our September 22 follow-up, we covered CBP’s initial implementation steps. This alert summarizes the IFR, explains where it departs from the EO, and outlines what importers, brokers, and their foreign trading partners should do now. 

Key Provisions of the IFR 

New Definitions: US IOR vs. Foreign IOR (New 19 CFR Part 110) 

US IOR (§ 110.2(a)). An individual qualifies if he or she is a US citizen or lawful permanent resident. An entity qualifies only if it: 

Beneficial owner (§ 110.1). A beneficial owner is a natural person who, directly or indirectly, meets either of two tests. An individual can qualify under either test or both:  

• Owns or controls at least 25% of the entity’s ownership interests.  
• Exercises substantial control over the entity. The regulation does not define “substantial control,” but the preamble explains that it can be exercised by a senior officer (e.g., the president or CEO), an individual with authority to appoint or remove certain officers, or an important decision maker regarding the entity’s business, finances, and structure.  

Ownership is traced through every layer of entities to the natural persons at the top. Every entity has at least one beneficial owner, and there is no maximum. The definition excludes, among others, nominees and agents, employees who are not senior officers, and creditors.  

Because control alone can make someone a beneficial owner, the 51% test may depend on who the entity’s senior officers and key decision makers are, not just who holds its equity. The IFR does not explain how the 51% is measured (e.g., by headcount or by ownership interest), or how the test applies to widely held or publicly traded companies with no 25% holder. Companies seeking to qualify as US IORs should document which individuals they treat as beneficial owners and why.  

Notably, the “significant amount” threshold under the real property test only appears in CBP’s FAQs at this time, and CBP retains broad discretion in verifying whether an entity qualifies as a US IOR. CBP’s FAQs also state that only the unencumbered value of property or assets counts towards the US IOR criteria. The IFR does not say how CBP will weigh the relevant considerations or provide any safe harbor, so outcomes will depend heavily on CBP’s case-by-case judgment. The Director of the importer’s assigned Center of Excellence and Expertise will ultimately decide whether the entity qualifies as a US IOR (new § 141.22(b)).  

US IOR status can change. CBP’s FAQs confirm that a change in beneficial ownership, or in the amount of unencumbered physical domestic assets or real property, can affect whether an IOR qualifies as a US IOR. An IOR should immediately notify its broker of any such change, and remains responsible for the accuracy of information its broker submits on its behalf.  

Entry Restrictions for Foreign IORs (New § 141.21) 

Foreign IOR (§ 110.3). Any IOR that does not meet the US IOR criteria is considered a foreign IOR. 

A foreign IOR may not enter merchandise for consumption, unless they meet one of the following conditions: 

• CTPAT-validated foreign IORs may file their own entries or hire any licensed broker, whether or not the broker is CTPAT-validated.
• Non-validated foreign IORs must designate a licensed, CTPAT-validated customs broker either to make entry or to act as the IOR. CBP has noted that 79% of brokers are not CTPAT validated and importer costs may increase due to CTPAT brokers’ new due diligence requirements.  

If the principal on the power of attorney is not the owner or purchaser of the merchandise, the CTPAT-validated broker must act as the IOR. If a broker acts as IOR for a principal that would itself qualify as a foreign IOR, that broker must also be CTPAT-validated. 

Using a CTPAT-validated broker does not give the IOR any CTPAT benefits. CBP’s FAQs also make clear that a pending CTPAT application is not enough: a foreign IOR that has applied for, but not received, validation must still use a CTPAT-validated broker, and a broker whose application is pending cannot file for foreign IORs. CBP has posted a public list of CTPAT-validated customs brokers. 

New US IOR Declaration on Every Entry (New § 141.22) 

Beginning January 5, 2027, all entries and entry summaries must be filed on updated versions of CBP Forms 3461 and 7501, or their ACE equivalents. CBP guidance issued on November 6 explains that the updated forms add three new fields. Filers must indicate:  

1. Whether the IOR qualifies as a US IOR (or, if a broker is acting as IOR, whether the principal on its power of attorney qualifies).  
2. Brokers must indicate when they are filing as IOR on a client’s behalf.  
3. The principal’s IOR number tied to the principal’s CBP Form 5106, if the broker acting as IOR is not CTPAT-validated. 

These changes reflect CBP’s focus on identifying the company responsible for each import. CBP has also built new system checks and may reject an entry if a foreign IOR does not satisfy these requirements. US IORs may continue to file their own entries or use any licensed broker, whether or not CTPAT-validated. However, they must be able to support the declaration with records under 19 U.S.C. § 1508. 

New Broker Verification Duty (New § 111.29(a)(2)) and Recordkeeping (Revised §§ 111.21(a), 111.23(b)) 

Before declaring US IOR status for a client, every broker must request and review the client’s records establishing that the § 110.2 criteria are met. Examples include proof of citizenship or permanent residence, corporate charters, financial statements and records, purchase receipts, and documents of title. A broker must keep verification records for five years from the date of verification and produce them to CBP on request. 

If a broker that is not CTPAT-validated learns that a client is not a US IOR, it must stop filing entries for that client. CBP recommends collecting the information when the power of attorney is executed. CBP also expects brokers to ask follow-up questions, and to decline to certify a client as a US IOR, where it appears US assets are being arranged solely to obtain US IOR status. CBP’s FAQs add that how often a broker should fully re-verify a client will vary with the circumstances (for example, less often for a large publicly traded company than for a recently established one), and that brokers should be particularly mindful of assets transferred into the United States only to meet the criteria and then moved out. 

CBP considered, but did not adopt, an alternative that would have exempted CTPAT-validated brokers from the verification requirement. Commenters may wish to revisit that alternative. 

Power of Attorney (Revised § 141.46) 

A broker must now hold a valid power of attorney before transacting customs business for a principal, including when the broker acts as IOR. CBP states that this amendment revokes by operation of law any conflicting ruling, including HQ 223772 (August 6, 1992), which had held that no power of attorney is needed when a broker enters goods in its own name as IOR. 

Consequences for Inaccurate Declarations and Broker Penalties 

Live entry and immediate delivery (New §§ 142.13(a)(5), (e); 142.25(a)(5), (c)). If CBP determines that an IOR, or a broker acting as IOR, inaccurately declared US IOR status, CBP may require live entry and discontinue immediate delivery privileges. These remedies apply to both formal entries (Part 142) and informal entries (Part 143). 

Broader Section 1592 exposure for brokers (Revised 19 CFR Part 171, App. B, ¶ (K)). Until now, CBP generally pursued brokers under 19 U.S.C. § 1592 only for fraud, or where the broker shared in the benefits of a violation beyond customary fees. Otherwise, CBP was limited to remedies under 19 U.S.C. § 1641, where penalties are capped at $30,000. The revised guideline allows CBP, at its discretion, to seek § 1592 penalties against brokers for any § 1592 violation. CBP notes that the maximum § 1592 penalty can reach the domestic value of the merchandise. This change reflects Section 4(a) of the EO, which calls for maximum penalties against brokers who fail to conduct due diligence or who repeatedly represent noncompliant clients.  

False Claims Act Liability. In addition to CBP’s administrative remedies, an inaccurate US IOR declaration could create exposure under the False Claims Act, which the US Department of Justice has increasingly used in customs matters involving the underpayment of duties. Because the IFR makes US IOR status an express declaration on every entry, importers and brokers should treat that declaration with the same care as other entry certifications. 

Where the IFR Departs From, or Has Not Yet Addressed, the Customs Enforcement EO 

• Informal entry is not (yet) banned. Section 2(b) of the EO directed CBP to prohibit foreign IORs from filing informal entries. The IFR does not go that far. CBP will monitor these filings and reserves the right to impose a full prohibition if risks remain. CBP specifically invites comments on that stricter alternative and links it to its separate Low-Value Shipments proposed rule, which would bring Entry Type 11 and postal informal entry requirements closer to formal entry. 
• Continuous bond restriction not addressed. Section 2(c)(i)(1) of the EO directed that foreign IORs generally may not rely on a continuous bond for formal entries. The IFR does not address bonding, so that directive, along with the EO’s minimum-asset/bonding, “good standing,” IOR registry, and enhanced vetting directives, is still to be addressed in future actions. 

What This Means for Importers 

• Determine your IOR status now. Identify the natural persons who own 25% or more or exercise substantial control and test whether at least 51% are US persons with control, or evaluate whether your unencumbered US real property meets CBP’s threshold (the greater of 100% of prior year entered value or $20 million). Pay particular attention to US subsidiaries of foreign parents, holding-company structures, and entities whose ownership changes over time, because the test applies “at all times.” Assemble the supporting documents your broker will request, and establish a process to notify your broker of changes affecting your status.
• Collect Documentation to support US IOR status. US IORs must be able to demonstrate their status in the event of a CBP inquiry. CBP recommends companies to retain the following types of documents, which is not all inclusive:
  • State and local business registrations and licenses as well as certificates of occupancy.
  • Financial records such as bank statements, inventory receipts, equipment title, and lease agreements.
  • Property and mortgage records, deeds, and insurance policies.
  • Documents reflecting address including invoices, POs, utility bills, and website.
  • Tax returns, corporate resolutions, shareholder ledgers/agreements, stock certificates, organizational charts, confirmation that compensation/distributions to reported owners are consistent with their reported ownership stake relative to other owners, and confirmation of no undisclosed side agreements.
  • Titles, deeds, mortgage records, or trust documents showing direct ownership of unencumbered US real property.
• Foreign IORs should choose a path before January 5, 2027. The main options are: (1) move to a CTPAT-validated broker; (2) arrange for a party that meets the § 110.2 US IOR criteria to act as IOR; or (3) for eligible importers, pursue CTPAT validation, which may take longer than 60 days. Expect more onboarding diligence and potentially higher brokerage fees, which CBP itself expects.
• Review commercial terms. Delivered Duty Paid (DDP) arrangements, nonresident IOR models, e-commerce fulfillment structures, and supplier agreements that rely on a foreign seller acting as IOR may need to be renegotiated or restructured.
• Clean up CBP Form 5106 data. The declaration and verification regime builds on CBP’s ongoing Form 5106 accuracy enforcement. Under that effort, inaccurate or incomplete data can lead CBP to void an IOR number.
• Treat the declaration as a compliance statement. Inaccurate declarations can trigger live entry, loss of immediate delivery, and potential penalty exposure.