Duty/Customs question when buying goods from overseas?

Question

I'm planning to buy 6 or so sweaters from Japan to sell on eBay and I was wondering how the tax/law works on them. Each cost $2,000, so they are NOT going to overlooked if opened by the customs

Will I have to be an "importer" in order to do so, or do I not need such status?

If I happen to get audited by IRS, I don't want to into trouble by not following the right steps to buy goods from overseas, so please let me know in detail.

Thank you.

Answer 1

Like it or not, if the total value of the sweaters are over $2000, you will need to file a formal customs entry. If the total value is
less than $2000.00, you will still need to file an informal entry.
Judging from the value per unit of the sweaters, you are an importer bringing in a commercial shipment intended for sale in the U.S.

Formal entries are usually done by importers hiring a licensed customhouse broker. You didn't provide information as to what makes these sweaters so expensive, but the duty rate depends on the country of origin (where the sweaters are made) and the
fiber content. Wearing apparel duties usually range from 5% to approx 30% of the FOB cost. Refer to the Harmonized Tariff Code for 2007 which can be found through this link:
http://www.usitc.gov/tata/hts/bychapter/index_old-01032007.htm

The customs broker will calculate this duty for you to pay when s/he makes the customs entry on your behalf. Once you pay this duty, you are free from customs restrictions and usually free from other governmental restrictions as to what you do with them.

In order to sell them to the public, you will need a seller's permit and pay the state and local sales taxes, but I think your CPA can help you with that.

If you need more help, call me at 650-589-8150. Ask for the Import Department and I will help you answer any other questions.

Answer 2

Customs (not the IRS) will assess the duty at the port of entry. You'll have to pay it before the goods can be delivered. If the items are dutiable, the duty will be assessed whether they're opened for inspection or not. The shipper will put a customs label on the shipment, you can count on that!

The only interest the IRS will have is when you sell them. The duty will increase your cost of goods sold which will reduce your profit and therefore your tax liability. So keep good records!

Answer 3

It's never a good idea to purchase a dog sight unseen. Look for local breeders where you can go look at the conditions in which the dogs are bred and raised. Any breeder that won't let you look has something going on that should make you leave immediately. Never purchase a dog from a pet store as nearly every single one comes from a puppy mill. They will bring you a lot of vet bills, tears and eventually a broken heart. The AKC website has a breeder referral service that can help you find someone close to home.

Answer 4

$2,000.....that's an expensive sweater.