For most of customs history, nobody asked whether an importer was “American.” If you had an importer number, a bond and a broker, you could import. That changes on January 5, 2027. Under CBP’s interim final rule implementing Executive Order 14411, every importer of record (IOR) must declare on each entry whether it is a “U.S. importer of record” or a “foreign importer of record,” and the answer turns on who owns and controls the company and what it actually has in the United States. These are the questions we are hearing most.
First, what does an importer of record actually do?
The IOR is the party legally responsible to CBP for the entry. In practice that means:
- using reasonable care to classify, value and state the origin of the goods correctly (19 U.S.C. §1484);
- paying the duties, taxes and fees, including bills that arrive months or years later after liquidation;
- keeping entry records, generally for five years (19 U.S.C. §1508; 19 C.F.R. part 163);
- maintaining a customs bond that covers its duty exposure;
- keeping its registration on CBP Form 5106 accurate;
- answering CBP requests for information and facing any penalties under 19 U.S.C. §1592.
The IOR is also the party that receives refunds, including IEEPA duty refunds through CBP’s CAPE process. Being the IOR is not a formality. It is the company that holds the risk.
Who qualifies as a U.S. IOR?
Individuals: U.S. citizens and lawful permanent residents (green-card holders).
Companies: the entity must be organized under U.S. law, be located in the United States, and at all times meet one of two tests:
- Ownership: at least 51% of its beneficial owners are U.S. citizens or permanent residents, and they control the company; or
- Real property: it directly owns a “significant amount” of unencumbered U.S. real property.
Any IOR that does not meet these requirements is a foreign IOR. Forming a U.S. subsidiary is not enough on its own.
Who is a “beneficial owner”?
A natural person who owns or controls at least 25% of the ownership interests, directly or indirectly, or who exercises substantial control over the company. CBP looks through holding companies and layers of ownership to the people at the top. Some people are excluded, such as ordinary employees, agents acting for someone else, and creditors. Every company has at least one beneficial owner.
What does “located in the United States” mean?
A registered agent’s address or a virtual office will not do. CBP may look at, among other things:
- whether the principal place of business is in the United States;
- whether there is a physical U.S. presence where real business happens, such as employees on payroll, revenue-generating activity or retail locations;
- whether the company has sufficient unencumbered physical assets here, meaning cash in a U.S. bank, U.S. Treasury bonds, or real property, inventory, machinery and equipment located in the United States (receivables do not count);
- whether its sales generally exceed its cost of goods, so that it earns its own profit rather than passing everything through to a foreign affiliate;
- whether it is adequately capitalized.
The point is to separate real U.S. businesses from shells set up to hold an importer number for a foreign manufacturer.
Some common situations
- A California LLC owned by a U.S. citizen, with a warehouse and staff in Ontario, California. A U.S. IOR, provided the records support it.
- A company owned by a married couple who hold green cards. Green-card holders count, so it can qualify.
- A U.S. company wholly owned by a parent in China. It fails the ownership test. Unless it directly owns a significant amount of unencumbered U.S. real property, it is a foreign IOR, even if it was formed here years ago and has employees.
- A company owned 50/50 by a U.S. citizen and a foreign investor. Fifty percent is not 51%. Unless the real-property test is met, it is a foreign IOR.
- A company run by an E-2 investor or an L-1 manager. Visa holders are not citizens or permanent residents, so their ownership does not count toward the 51%. Many investor-visa businesses will be foreign IORs.
The rule does not yet say how much real property is “significant.” CBP may issue guidance, and that is one of the questions on which comments are invited.
What happens on each entry?
The entry (CBP Form 3461) and entry summary (CBP Form 7501), and their electronic versions, will include a declaration of whether the importer is a U.S. IOR. Before a broker may declare you a U.S. IOR, it must ask for and review records that support the claim, such as proof of citizenship or residence, formation documents, ownership records, financial statements and property deeds, and keep them for five years. CBP can also verify status itself, looking at your place of business, employees, revenue, assets, profitability and capitalization.
What if we declare U.S. status and CBP disagrees?
CBP can require payment of estimated duties before releasing your goods and can withdraw immediate-delivery privileges, which slows down every shipment. Brokers who declare status without checking face penalties of their own, which is why they will be careful, and why you should expect detailed document requests. A false declaration can also feed into a §1592 penalty case.
Are U.S. IORs affected by anything else in the order?
Yes. Executive Order 14411 also calls for minimum assets or bonding for all IORs, a “good standing” requirement based on compliance and payment history, a risk-tiered IOR registry, more data at entry and a 50% floor on penalty mitigation. Those pieces are still being rolled out. A U.S. IOR keeps its continuous bond and does not need a CTPAT-validated broker, but it will feel the rest.
Our company may not qualify. What are the options?
- Accept foreign-IOR status and comply: use a CTPAT-validated broker and plan for the extra cost and slower clearance.
- Change who imports: let a qualifying U.S. customer or distributor act as IOR and sell to it before importation, with contracts and Incoterms to match.
- Restructure for real: real U.S. ownership and control, or substantial U.S. real property, can qualify a company. Paper changes will not; CBP looks at substance, and a structure built only to pass the test invites scrutiny. Tax, immigration and estate-planning consequences have to be considered together.
What should we do before January 5, 2027?
- Map the ownership of each importing entity up to the individuals.
- Gather the proof: IDs or green cards, formation and ownership documents, recent financial statements, leases or deeds, payroll records.
- Update Form 5106 so it matches.
- Ask your broker what it will need, and whether it is CTPAT-validated in case any of your entities turns out to be foreign.
- Check that your bond still covers your duty exposure.
Sources: Executive Order 14411 (June 3, 2026), sec. 10; CBP interim final rule, Heightened Requirements for Foreign Importers of Record, CBP Dec. 26-19 (Nov. 6, 2026), adding 19 C.F.R. part 110; 19 U.S.C. §§1484, 1508, 1592; 19 C.F.R. parts 113 and 163. As of November 14, 2026. This article is general information, not legal advice.
