UPDATE: Trade Alert – U.S. CBP’s Heightened Enforcement, Tightening Rules for Foreign Importers of Record

UPDATE: Flegenheimer would like to add that CBP has also provided the trade with this 25-minute video summarizing the Interim Final Rule which includes the regulatory changes and new requirements for foreign Importers of Records and Customs Brokers.

Under Executive Order 14411 (Strengthening Customs Enforcement), a CBP interim rule issued November 5, 2026, mandates that any entity failing to qualify as a U.S. Importer of Record will be classified as a foreign importer of record. Effective January 5, 2027, these foreign importers must either hold a validated CTPAT membership or utilize a validated CTPAT customs broker to file entries.

FLEGENHEIMER INTERNATIONAL, INC. IS A CTPAT VALIDATED CUSTOMS BROKER. 

According to the interim rule:

“CBP establishes the requirements that must be met to be considered a U.S. IOR in new 19 CFR 110.2(a), to allow CBP, IORs, and customs brokers to know who qualifies as a U.S. IOR and who does not.

Pursuant to this new provision, a U.S. IOR is:
an individual who is a United States citizen or lawful permanent resident, or an entity that is organized under the laws of the United States, is located in the United States, and maintains at all times: (i) at least 51% of beneficial owner(s) who are United States citizens or lawful permanent residents and have control of the entity; or (ii) direct ownership of a significant amount of unencumbered real property in the United States. With respect to real property ownership, the property can be subject to some encumberment, but the net unencumbered value of the real property must be of a significant amount.”

In the new § 110.2(b), CBP has set forth a verification process for confirming that a party meets the requirements to be considered a U.S. IOR.

Some Key Takeaways:

CBP may determine U.S. IOR qualifications on a case-by-case basis. Relevant criteria include:

• Principal Place of Business: Where the entity is physically and operationally headquartered.

• Physical Operations & Presence: The location and scale of physical operations, employees, and active revenue-generation activities in the U.S.

• Domestic Assets & Capitalization: The volume of physical domestic assets, real estate holdings, net unencumbered property value, profitability, and overall capitalization.

• Ownership & Control: Who ultimately owns and controls the importing entity (looking beyond mere state incorporation paperwork), including the citizenship or permanent residency status of natural-person beneficial owners and senior officers.

• Instrumentality Status: Whether the entity is merely an instrumentality of a foreign manufacturer lacking substantial domestic presence.

• Gross sales generally exceeding the cost of goods sold; and

• Sufficient capitalization. 

Required Documentation: Records to retain for 5 years may include: 

(These list are not comprehensive and are intended to provide general guidance. Individual cases will be handled on a case-by-case basis. 

• Proof of U.S. citizenship or permanent residency
• Corporate charters and formation documents
• Financial statements and accounting records
• Purchase receipts and bills of lading
• Title documents for real property or goods

For Business Entities located & Organized in the U.S.

Secretary of State and Other Government records:

• State business registration
• Local business license
• Certificate of Occupacy

Financial and Business Records:

• Bank Statements
• Lease Agreements 
• Property or Morgage records 
• Insurance policies
• Invoices or Purchase Orders listing the business address
• Utility Bills
• Website or Warehouse evidence

U.S. Legal Entity Considerations

Secretary of State Records:

• State business registrations
• Articles of Incorporation, organization, or formation
• Certificate of good standing

Physical Domestic Assets (Unencumbered)

• Cash in the U.S. bank accounts
• U.S. Treasury Bonds
• Title Deeds
• Inventory receipts
• Machinery or equipment titles or receipts

Anticipation of Profit/Capitalization

• Proof of Revenues & Tax Returns
• Managerial accounting spreadsheets
• Business Plans 
• Bank Loans
• Lines of Credit

Additional Considerations

Ownership:

At least 51% owned/controlled by U.S. Citizens or LPRs

• Tax Returns
• Corporate Resolutions shareholder ledgers/agreements
• Stock certificates
• Confirmation of distributions
• Organizational chart
• Confirmation of no undisclosed side agreements

Real Property:

• Titles
• Deeds
• Mortgage Records 
• Trust documents showing direct ownership of unencumbered U.S. real property
 

Examples of Domestic Assets (Watch the video for further information)

• Cash in the U.S. Bank
• U.S. Treasury documents
• Real Property
• Inventory
• Machinery Equipment

Customs brokers now face strict legal responsibilities before declaring a client as a “U.S. IOR” on updated CBP Forms 3461 or 7501 as the broker must request, review, and verify physical records confirming the client’s domestic legitimacy.

Flegenheimer International, as part of our broker due diligence, already implements a pretty stringent vetting when on-boarding importers. We will be contacting you if we need to re-vet your entity as an importer of record. We may ask for additional verification documents if necessary. 

As an importer, you should determine whether you qualify as a U.S. IOR before January 5th, 2027 by:

-Reviewing the definitions of U.S. IOR, beneficial owner, and physical domestic assets.

-Gather records supporting your U.S. IOR status, if applicable

-If you are a foreign IOR, confirm whether you are CTPAT validated.

-If you are a foreign IOR, confirm whether your broker is CTPAT validated

-Coordinate with your broker to ensure the following are complete and accurate:

   – Valid POA

   – Updated CBP 5106; and

   – All applicable filing requirements are understood and met

If you qualify as a U.S. IOR, beginning January 5th, 2027, you must:

-Declare your U.S. IOR status at the time of entry and entry summary.

-Maintain records supporting your U.S. IOR qualification.

-Provide records supporting your qualifications as a U.S. IOR to your Licensed Customs Broker, with whom you have  a valid POA. 

-Provide records supporting your qualifications as a U.S. IOR to CBP upon request. 

CBP Enforcement:

-CBP may require live entry 

-Suspend immediate delivery priviliges

-And/or take other enforcement actions if:

• A foreign IOR inaccurately declares U.S. IOR status at entry or entry summary.
• A foreign IOR attempts to file without being CTPAT validated or without using a CTPAT validated broker.
• A non-CTPAT validated broker files for or on behalf as a non-CTPAT validated foreign IOR.
• A non-CTPAT validated broker acting as the IOR fails to identify the principal.
• Required ACE fields are missing or inconsistent with other record information.      

If you would like to read and/or submit public comments on the interim final rule, you must submit them electronically on or before the deadline of January 5, 2027. All submissions must explicitly reference the docket number USCBP-2026-1387.

Public Comments Website:

https://www.regulations.gov/docket/USCBP-2026-1387/document?withinCommentPeriod=true

Flegenheimer International Team