New Importer of Record Rules Could Reshape Customs and Tax Planning for Foreign Companies

Foreign companies that import goods into the United States may need to revisit their customs and tax structures before new importer of record (IOR) rules take effect. A June 3, 2026, executive order directs the Department of Homeland Security and U.S. Customs and Border Protection (CBP) to strengthen customs enforcement, with a focus on IOR accountability, duty collection, supply chain transparency, and enforcement against undervaluation, misclassification, forced labor, and illegal transshipment.

Although the order is framed as a customs enforcement measure, the business impact may reach well beyond entry documentation. Foreign importers should assess how the new requirements could affect customs compliance, federal income tax exposure, transfer pricing, state and local tax nexus, cash flow, and supply chain operations.

What Is Changing?

The executive order requires federal agencies to revise rules, guidance, and policies governing IOR eligibility. Those revisions are expected to include minimum domestic asset or bonding requirements, greater bond coverage, additional reporting to CBP, and expanded disclosures involving anticipated import volumes, ownership, beneficial ownership, business affiliations, and domestic assets.

The order also targets foreign IORs that use informal entry processes for low-value imports. CBP is directed to prohibit foreign IORs from filing informal entries and to impose additional formal entry requirements. For formal entries, foreign IORs may be restricted from relying on continuous bonds unless CBP determines that revenue is fully protected and compliance can be assured. They also may need to be validated through the Customs Trade Partnership Against Terrorism (CTPAT) program, if eligible, or use a CTPAT-validated licensed customs broker.

The order further instructs CBP to update the IOR registry, remove inactive IORs, confirm active IOR compliance, create risk-based tiers, and establish enhanced vetting for parties involved in import activity.

Customs Risks Are Expected to Rise

The compliance standard for importers is already significant. Under 19 U.S.C. § 1484, an importer of record must use reasonable care when filing the documentation or information needed for CBP to determine release, value, classification, duty rate, statistics, and other legal requirements.

The executive order raises the stakes by directing agencies to increase audits, enforce liquidated damages claims, restrict in-bond use, and impose maximum penalties on brokers in certain circumstances. It also calls for revised mitigation standards, including a minimum penalty floor of not less than 50% of the assessed penalty, absent exceptional circumstances that materially affect national security.

Those requirements matter because 19 U.S.C. § 1592 already prohibits fraudulent, grossly negligent, or negligent statements or omissions in connection with importing merchandise into U.S. commerce. Penalties can vary by level of culpability and, in cases of fraud, may reach the domestic value of the merchandise.

For importers, the practical risk is clear: documentation gaps, classification errors, unsupported valuations, or inconsistent origin claims may become more expensive and harder to resolve.

The Tax Consequences May Be Even More Significant

Foreign companies may respond to the new IOR standards by expanding their U.S. footprint through assets, personnel, affiliates, or operating structures. Those changes may help satisfy customs requirements, but they can also create U.S. tax implications.

The IRS explains that when a foreign person engages in a U.S. trade or business, U.S.-source income connected with that business is generally treated as effectively connected income (ECI). ECI is taxed in the U.S. on a net basis at graduated rates after allowable deductions. By contrast, certain fixed, determinable, annual, or periodical income that is not ECI may be subject to a 30% tax rate, or a lower treaty rate, on the gross amount.

State and local tax exposure also deserves attention. CBIZ guidance notes that nexus is the connection between a taxpayer and a state that creates a filing obligation. Activities such as physical presence, employees, inventory, or reaching sales thresholds may establish nexus. Since South Dakota v. Wayfair, states have expanded economic nexus standards, particularly for sales tax collection.

Transfer pricing is another pressure point. If customs values, related-party pricing, and income tax positions are not aligned, companies may face more questions from customs and tax authorities. Importers should consider whether their documentation supports both customs and tax reporting positions.

Actions to Consider Before the December 2026 Deadline

Companies importing goods into the U.S. should begin planning across customs, tax, finance, and operations:

• Review current IOR structures and identifying whether a foreign IOR model remains practical
• Assess bond coverage, domestic asset needs, broker relationships, and CTPAT-related requirements
• Test classification, valuation, country-of-origin, and supply chain documentation
• Review related-party import pricing for consistency across customs and income tax reporting
• Evaluate whether U.S. assets, personnel, or affiliates could create ECI or state and local tax nexus
• Model cash flow impacts from higher duties, bonding requirements, technology investments, and advisory costs
• Update record retention and internal controls before enforcement deadlines arrive

Looking Ahead

The executive order could make importer of record planning a broader business issue for foreign companies selling into the U.S. Customs compliance, tax structure, transfer pricing, and state nexus should be reviewed together rather than handled as separate workstreams.

Companies that act early may be better positioned to preserve market access, manage duty and penalty exposure, and avoid creating unintended tax obligations. Those that wait may face a more complicated restructuring process after the new enforcement framework takes effect.

If you have questions about the executive order, please contact a member of our international tax team.