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Apparel | Newsletter |
| Transacting Customs Business And The Need For Powers Of Attorney |
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March 6, 2007 A "Power of Attorney" or POA is required almost any time someone transacts "customs business" on behalf of a corporation. A POA is also required any time a third party transacts "customs business" on behalf of an individual or partnership. A POA is a legal grant of authority from one person to another to act on their behalf. The grantor is referred to as the principal, and the grantee is referred to as the agent. The agent acts for the principal. Usually, the actions of the agent are attributed to the principal. This is why an importer is liable for mistakes that a customs broker might make in the execution of their duties as agent for the importer. A POA may be either general, with unlimited authority, or limited, as explicitly defined by its terms. A general POA is also unlimited in duration. It is valid until revoked, unless it has language in it regarding a termination date. In order to file a customs entry and clear goods for entry, a customs broker must have a POA from the importer of record or the ultimate consignee of the shipment. There are exceptions to this but this is the general rule. The importer of record is the purchaser or owner of the goods, or someone who has a similar interest in the goods. A POA is also required for someone to file a drawback entry or a protest. Other Customs documents must also be executed by someone that has a POA from the corporation. One example is the importer's declaration that must be presented with an entry associated with claims of U.S. goods returned (HTS 9801). Section 10.1(a)(2) of the Customs Regulations provides:
The Customs Regulations do not explicitly define who in a corporation is authorized to execute a POA. Section 141.38 merely states that: "when a power of attorney is required for a resident corporation, it shall be executed by a person duly authorized to do so." [Emphasis added.] The question is answered by turning to the general laws of "agency" or "corporations," where it is generally provided that any employee legally authorized to bind the corporation may sign a POA. The authority of officers of a corporation, if not legislated by state corporation codes, is usually set forth in the corporation's bylaws, or authorized by the corporation's board of directors. Traditionally, the president, vice president, secretary, or treasurer of a corporation has this power; however, neither job titles nor the authority of a corporation's officers is standard. In today's corporate world, the function of a corporate president can be divided up to sub-roles, such as: " Chief Executive Officer," "Chief Operating Officer," or "Chief Financial Officer." None or all may have the authority to bind the corporation to certain types of legal commitments. Recognizing this, Customs stated in HQ 228104, July 24, 1998, that "it is not possible to accept on face value that an officer of the corporation has the inherent authority to bind a corporation merely by virtue of his or her title." The ruling noted that the "burden falls on the person signing and asserting his or her authority to provide evidence that he or she has authority to bind the corporation." Most often, this is confirmed by providing a copy of the corporation's bylaws, or by providing a statement authorized by the corporation's board of directors or legal secretary that this person has the legal authority to bind the corporation. This is universally required in order for a company to issue a waiver of the statute of limitations in a penalty case that is subject to administrative review. It is also possible for someone in your company, other than a corporate officer, to execute a POA. In order to do so, however, they will need to have a POA issued to them, granting them the authority to sign Customs documents and appoint agents (such as a broker) to transact customs business on behalf of the corporation. It is, therefore, possible to have a "Chief Operating Officer," or "Chief Financial Officer," or any other "officer" sign a customs POA, provided there is evidence that they have the general authority to bind the corporation. It is also possible to have persons in lower levels of management, such as an import manager or director, execute powers of attorney to sign customs documents or to transact or "customs business." In order to do so, however, they must have an appropriate delegation of authority. For purposes of the Customs regulations, transacting "customs business" means:
"Customs business'' however, does not include the mere electronic transmission of data received for transmission to Customs, and does not include a corporate compliance activity. "Corporate compliance activity'' means any activity performed by a business entity to ensure that documents for a related business entity or entities are prepared and filed with Customs using "reasonable care'', but such activity does not extend to the actual preparation or filing of the documents or their electronic equivalents. For purposes of this definition, a "business entity'' is an entity that is registered or otherwise on record with an appropriate governmental authority for business licensing, taxation, or other legal purposes, and the term "related business entity or entities'' encompasses a business entity that has more than a 50 percent ownership interest in another business entity, a business entity in which another business entity has more than a 50 percent ownership interest, and two or more business entities in which the same business entity has more than a 50 percent ownership interest. If you have any questions with regard to this newsletter, please contact George R. Tuttle, III at (415) 288-0428 or geo@tuttlelaw.com. George R. Tuttle, III is an attorney with the Law Offices of George R. Tuttle in San Francisco. The information in this article is general in nature, and is not intended to constitute legal advice or to create an attorney-client relationship with respect to any event or occurrence, and may not be considered as such. Copyright © 2007 by Tuttle Law Offices. All rights reserved. Information has been obtained from sources believed to be reliable. However, because of the possibility of human or mechanical error by our offices or by others, we do not guarantee the accuracy, adequacy, or completeness of any information and are not responsible for any errors, omissions, or for the results obtained from the use of such information. |
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