Customs Duty on Internet Purchases

Article I, Section 8 of the Constitution gives Congress the power to lay and collect Taxes, Duties, Imposts and Excises.

Are internet purchases from foreign countries subject to Customs duties under the Harmonized Tariff Schedule of the United States (HTSUS)?

It is easy in today’s global market to purchase anything online from just about anywhere in the world. But what happens after the purchase? Are purchases subject to Customs duties? Internet electronic transactions themselves are not subject to tariff duties or taxes, not yet anyway. But the products purchased online from foreign countries surely are.

Customs law requires that all imported merchandise must clear Customs before they can be released, and that includes purchases made over the internet. Internet purchases, with some exceptions, have to be entered, classified, and appraised just like any other goods that are imported into the U.S.. The classification of the goods (assigning tariff numbers) found in the Tariff Schedule determines the applicable duty rates for particular products. The duty rates may be free, may be a percentage of the value (ad valorem), may be a specific amount such as $0.25 each, or a combination of both.

The correct duty rates depend on the products themselves, the country of their manufacture, and their value.

Some products carry higher duty rate than others. Some products enter the U.S. unconditionally free and some are duty free from some countries under trade programs.. Some products have additional duties (anti-dumping or countervailing) tacked on to the regular duties.

Products from countries (most favorable nations) with which the U.S. normally trades with carry lower duty rates than Communist countries which carry the highest duty rates.. The U.S. has trade agreements with some countries that provide for lower duties or zero duties. Most products entering the U.S. from Canada or Mexico, for example, are duty free if they are considered originating under the North American Free Trade Agreement (NAFTA).

If the value of internet purchases is less than $200.00, generally the products are administratively exempt from duty requirements or entry requirements. The government doesn’t want to mess with anything less than $200.00. Of course, there are exceptions. In the import rules and regulations there are exceptions for just about everything.

If the value of the internet purchases is less than $2,000.00 the products may or may not be dutiable and can be cleared informally by just presenting an invoice and shipping documents to Customs. There are exceptions here to.

If the value of the internet purchases is more than $2,000.00 the products may or may not be dutiable and have to be cleared formally which is a bit more complicated and requires a Customs bond. Yes, there are exceptions here to.

Whether internet purchases are subject to tariff duties and a host of other import requirements depends on the products themselves, the country of their origin, and their value. Duty rates may also depend on whether the products are for personal use or for commercial use (for resale).

The amount of duties determined under the Harmonized Tariff Schedule should never be changed by claiming the products are from one country when in fact they are from another, or by understating the value of the products, or by declaring them as one thing when they are something else.

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