All U.S. Importers, Brokers to Be Impacted by CBP’s Interim Final Rule

New requirements are coming for importers and customs brokers. On November 6, 2026, U.S. Customs and Border Protection issued an Interim Final Rule that will change entry requirements beginning January 5, 2027. The new regulations and amendments impose new obligations on all: U.S. importers of record (IORs), foreign IORs, as well as brokers.

The Interim Final Rule (IFR) creates a new obligation for U.S. IORs to prove they are not foreign. Effective January 5, U.S. Customs and Border Protection (CBP) will change entry declaration documents — CBP Forms 7501 and 346 — to require reporting the U.S. IOR status (affirmatively or negatively) for each entry. This change will create new and potential liability for all importers.

In addition, non-U.S. IORs, or “foreign IORs,” must become CTPAT validated or use a CTPAT-validated broker to enter merchandise into the United States, whether formal or informal.

The IFR also changes recordkeeping requirements to include new documents substantiating U.S. IOR status, such as proof of citizenship or corporate ownership and control.

Finally, the IFR raises the stakes for brokers by requiring them to validate U.S. IOR status and significantly increases penalty exposure for brokers up to and including the domestic value of the merchandise.

These changes are sweeping and swift. For decades, CBP has fought the challenges of shell companies and the elusive disappearance of importers, and the resulting inability to collect on tariffs owed, as well as to protect American consumers from intellectual property rights violations and restricted or prohibited merchandise. The Trump Administration’s June 3 Executive Order 14411 (“Strengthening Customs Enforcement”) gave CBP the mandate to make the changes the agency deems necessary to combat real and pervasive risks to the revenue and to national security. The impact on all importers cannot be overstated.

Are You a U.S. Importer of Record?

First, an importer must determine whether it meets the definition of a U.S. IOR. For individuals, a U.S. IOR is a U.S. citizen or lawful permanent resident (LPR). For entities, the importer must be:

1. Organized under U.S. law;
2. Located in the United States; and
3. Satisfying one of the following two tests at all times:
   a. Ownership Test: At all times, at least 51% of the entity’s beneficial owners must be U.S. citizens/LPRs and have control of the entity.
   b. Real Property Test: The entity must directly own a significant amount of unencumbered U.S. real property.

To eliminate shell companies that evade CBP enforcement, the IFR incorporates the beneficial ownership framework of the Financial Crimes Enforcement Network (FinCEN) and pierces the layers of corporate ownership to the individuals who ultimately own or control an entity. Under this framework, every entity must have at least one beneficial owner. The IFR establishes that a natural person may qualify as a beneficial owner by actual ownership (not less than 25 percent) or by exercising (directly or indirectly) substantial control over the entity (e.g., having authority to remove officers or directors).

Separate from the ownership and real-property tests, an entity must be “located in the United States.” In determining whether an entity is “located” in the United States, CBP will consider the size and scale of the entity’s overall operations and whether it is an instrumentality of a foreign manufacturer without a substantial U.S. presence. CBP may also consider:

1. The entity’s principal place of business;
2. A physical U.S. presence with substantial business operations;
3. U.S. physical domestic assets;
4. Gross sales that exceed cost of goods sold; and
5. Whether the entity is sufficiently capitalized.

CBP limits physical domestic assets to those it considers readily traceable and reachable to satisfy customs debts. These include U.S. bank deposits, U.S. Treasury bonds, and U.S.-located real property, inventory, machinery, and equipment. Notably, accounts receivable are excluded from consideration, as CBP considers such accounts difficult to value or trace.

An importer must be able to demonstrate its U.S. IOR status with substantiating documents. The documents necessary to do so will be evaluated by CBP on a case-by-case basis. Specifically, the agency will consider criteria such as whether:

1. The entity’s principal place of business is in the United States;
2. The entity has a physical presence in the United States where substantial business transactions are conducted, such as paying employees, generating revenue, or operating retail locations;
3. The entity maintains sufficient unencumbered physical domestic assets;
4. The entity directly owns a sufficient amount of unencumbered real property in the United States;
5. The entity’s gross sales generally exceed its cost of goods sold and the entity is structured in a manner that is anticipated to generate its own profit; and
6. The entity is sufficiently capitalized.

The records CBP (or brokers) will review to evaluate U.S. IOR status are now required to be kept pursuant to CBP’s recordkeeping requirements and include:

1. Proof of citizenship or lawful permanent residence;
2. Corporate charters;
3. Financial statements and records;
4. Purchase receipts; and
5. Documents of title.

The IFR does not impact only foreign IORs because U.S. IORs will also have to analyze, determine, and maintain substantiating documentation that they qualify as U.S. IORs. At any time CBP or the broker can seek to validate the assertion of U.S. IOR status. This creates unprecedented reporting requirements and obligations for U.S. entities to disclose corporate ownership and financial information merely to bring merchandise into the United States.

The enforcement consequences for an inaccurate declaration of U.S. IOR status are significant. The IFR contemplates immediate entry consequences even before CBP pursues any investigation or potential penalty actions under 19 U.S.C. § 1592. For example, if CBP disagrees with the U.S. IOR declaration, CBP reserves the right to require “live entry,” which means that the entry summary and estimated duties, taxes, and fees must be filed and paid before the merchandise is released. CBP may also discontinue immediate-delivery privileges, which means that CBP will not physically release the merchandise until the importer satisfies all entry requirements, which presumably will include satisfying CBP’s requirements to substantiate U.S. IOR status. Accordingly, an importer may face cargo-release delays, loss of immediate delivery privileges, and potential penalty exposure for false declarations of U.S. IOR status.

Are You a Foreign Importer of Record?

If the importer does not meet the definition of a U.S. IOR, it is considered a foreign IOR. Foreign IORs are now required to either be Customs Trade Partnership Against Terrorism (CTPAT) validated or import goods using a CTPAT validated broker.

The CTPAT program was established in 2001 in the wake of the September 11, 2001 terrorist attacks and has been a voluntary program administered by CBP. Previously, the program sought to provide advantages to importers (e.g., reduced CBP examinations and shorter wait times at the border) in exchange for committing to significant supply chain visibility and internal monitoring.

The IFR breathes new life and significance into the CTPAT program. One important fact, however, is that the only foreign IORs that are currently CTPAT eligible are Canadian IORs. To be CTPAT eligible, the importer must be an active U.S. importer or non-resident Canadian importer. At this time, the CTPAT program does not define “U.S. importer” in terms of ownership or citizenship, but rather it is defined operationally as being “active” (imports in the last 12 months), holding an IOR number and valid continuous bond, operating a business office staffed in the U.S. or Canada, and having no unresolved debt, among other criteria. The IFR suggests, however, that CBP will apply the new definition of a “U.S. importer” to those who are eligible for CTPAT validation.

Accordingly, in practice, all non-Canadian foreign IORs will be required to use a CTPAT validated broker.

Are You a Broker?

The IFR significantly changes the role and duties of brokers. Under the IFR, brokers will be required to validate whether an importer qualifies as a U.S. IOR and refuse to declare as such if any questions remain unresolved (e.g., sufficiency of U.S. assets). Brokers will be required to make determinations as to ownership, control, beneficial owners, location of assets, encumbrances, capitalization sufficiency, and citizenship. Brokers are expected to receive and maintain sufficient documentation to substantiate such determinations pursuant to recordkeeping requirements and keep such documents for at least five years. It is unclear how often such “reviews” must be renewed. Although some reprieve was given and brokers may request delayed compliance with the new client-verification requirements, all brokers must comply fully by May 6, 2027.

CBP has also eliminated the ability for brokers to act as IOR without otherwise identifying the importer (“principal”) by Employer Identification Number or IOR number. Brokers must now have a power of attorney whenever the broker transacts customs business for a principal, including when the broker acts as IOR.

The enforcement consequences for brokers are also being changed significantly. Previously, penalties for brokers beyond capped monetary penalties and revocation or suspension of licenses were limited to instances of fraud. Practically, enforcement against brokers has historically been limited to egregious instances of fraud. The IFR enhances broker liability to include penalties for negligence, gross negligence, as well as fraud (including aiding and abetting). The IFR leaves the selection of the enforcement mechanism to CBP’s discretion rather than prescribing a single penalty for an inaccurate U.S.-importer status declaration.

Conclusion

The IFR creates new responsibilities and liabilities for all importers and brokers. Importers should immediately gather the information necessary to determine under which IOR category they fall and secure a CTPAT validated broker, if necessary.

The IFR leaves certain implementation details unresolved. For example, the rule does not specify how the 51 percent beneficial ownership threshold will be applied in practice, especially where beneficial owners qualify through “control” (rather than ownership) and whether control must be held individually or may be held collectively. The IFR also does not define what amount of U.S. real property is “significant,” how much “encumbrance” is too much, how encumbered property is to be valued, or what constitutes “sufficient” capitalization. In addition, the rule does not state how often a broker must affirmatively assess an importer’s status to mitigate liability.

Further, the IFR lacks clarity on how to challenge or seek reconsideration of any CBP determination that the claimed U.S. IOR status has not been met. The decision as to whether U.S. IOR status has been met will be made by the Director of the appropriate Center of Excellence and Expertise.

CBP will accept comments on the IFR through January 5, 2027, the effective implementation date.

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Against this evolving regulatory backdrop, Cassidy Levy Kent’s multidisciplinary team of attorneys, licensed customs brokers, compliance professionals, economists, and trade specialists is well positioned to assist companies in navigating complex and changing entry requirements and tariff compliance. Careful planning and regular assessment of entry practices will remain essential as companies adapt to changing requirements and manage associated risks.