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What importers need to know about Entry Type 86

  • Jun 29, 2020 | Gail Cole

customs-agent-warehouse-searching-hs-codes

Global ecommerce has surged in recent years, increasing by more than $0.5 trillion in 2019 alone. Much of this growth comes from online sales of low-value shipments. To facilitate the import of these goods, many countries have fast-tracked imports of low-value ecommerce shipments. The United States is now doing the same with Entry Type 86.

Entry Type 86 is within Section 321 (referring to Section 321 of the Tariff Act of 1930) and applies to low-value goods exempt from customs duty. To be considered “low value,” merchandise must be valued at $800* or less (below the U.S. de minimis threshold). Many online sales fall within this category.

Although free from customs duty, Section 321 low-value shipments remain subject to oversight by U.S. Customs and Border Protection (CBP). By requiring the electronic filing of necessary documents, Entry Type 86 allows CBP to ensure regulatory requirements are met while expediting clearance.

Entry Type 86 also provides expedited entry for certain low-value shipments subject to Partner Government Agency (PGA) requirements, like toothbrushes. Because they enter the body, toothbrushes must be cleared by the Food and Drug Administration. Failure to obtain approval by the necessary PGA can lead to delays or even rejected shipments.

However, agricultural products, alcohol, or tobacco products are not eligible for Entry Type 86.

How Entry Type 86 works

The owner, purchaser, or designated customs broker must electronically enter the following data into CBP’s new Automated Commercial Environment (ACE):

  • Bill of lading or the air waybill number
  • Consignee name and address
  • Country of origin
  • Entry number
  • Fair retail value in the country of shipment
  • Importer of Record (IOR) number of the owner, purchaser, or broker (required when the shipment is subject to PGA data reporting requirements)
  • Planned port of entry
  • Quantity
  • Shipper name, address, and country
  • Harmonized System code (HS code)

The information can be entered at any time prior to the arrival of the cargo, upon arrival, or up to 15 days after arrival of the cargo. Entering it early expedites the import process.

What’s an HS code?

An HS code — also known as a Harmonized Tariff Schedule (HTS) or Harmonized Tariff Schedule of the United States code (HTSUS) code — is part of a global system used to identify merchandise that crosses international borders. The first six digits of the code are the same in all countries that use the Harmonized System; the remaining digits are unique to individual countries.

Assigning the proper HS code to a product is arduous, as there are millions of codes to choose from: A 100% cotton shirt has a different code than a 50% cotton shirt; a sandal made with leather has a different code than a sandal made with leather and cloth; and so on. Unfortunately, shipments lacking the proper HS code can be delayed at customs or even rejected.

HS codes typically aren’t required for low-value imports. This is the biggest difference between Entry Type 86 and other clearances — for example, through a container freight station (CFS) or an express consignment carrier facility (ECCF).

Yet there are downsides to shipping via CSF or ECCF, too.

CSF

Shipping through a CFS doesn’t require HS codes. However, it’s a delayed process.

When a shipment arrives, the broker must secure physical release from the local customs office, which operates Monday to Friday. Customs officials process manifests individually by batch, and peak period can extend the time of review. Once approved, the broker can release the shipments from their warehouse. The process can take days. In the meantime, goods pile up, blocking additional shipments. 

ECCF

ECCF clearance is electronic and immediate: CBP officials have offices in these express consignment carrier facilities and examine shipments upon arrival, seven days per week.

Yet like most expedited processes, there’s a cost: $1.07 per airway bill, plus broker fees. It’s also not available to everyone. Only a limited number of couriers, including DHL and FedEx, have a license to clear via ECCF.

The pros and cons of Entry Type 86

In a way, Entry Type 86 combines the best aspects of CSF and ECCF: It doesn’t have the ECCF expedited fee and it’s fast, even for products requiring PGA approval. Upon receipt of the necessary data, CBP releases the shipment for distribution (all merchandise is released conditionally and subject to recall). If CBP has the information prior to the arrival of a shipment, there may be no delays at all.

The trade-off is that Entry Type 86 requires an HS code.

Fortunately, assigning HS codes can be automated. Avalara Item Classification allows importers to swiftly assign the proper HS code to each shipment.

* Shipments of agricultural products, alcohol, and tobacco products typically don’t qualify for the exemption.


Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Avalara Author
Gail Cole
Avalara Author Gail Cole
Gail Cole is a Senior Writer at Avalara. She’s on a mission to uncover unusual tax facts and make complex laws and legislation more digestible for accounting and business professionals.