Closing the De Minimis Loophole Act
Closing the De Minimis Loophole Act seeks to end the practice of duty-free or minimal-duty entry for most goods under the Tariff Act of 1930 (section 321). The bill would effectively eliminate the de minimis entry option that allows small-value shipments to enter without paying duties, by removing the statutory basis for such informal entries and requiring formal entry with duties for most shipments. It introduces a phased timeline: shipments from China would begin transitioning to the new regime immediately upon enactment (with a narrow exception for shipments loaded before enactment or in transit in the final leg to the U.S.), while shipments from all other countries would transition to the new rules 120 days after enactment. The bill also directs Treasury to conduct rulemaking to implement these changes, strengthen data and entry requirements (including HTS classifications at the 10-digit level), and shore up penalties for informal entry. It also addresses how USPS shipments will align with the new system. In short, this bill aims to ensure that nearly all imported goods are entered formally and subject to duties, closing a long-standing loophole that has allowed certain small or de minimis shipments to slip past duties and enforcement. The approach includes transitional rules, a significant rulemaking process, and coordination with the postal system to maintain consistency.
Key Points
- 1Elimination of de minimis treatment under the Tariff Act of 1930 by removing subsection 321(a)(2)(C) and related informal-entry provisions, meaning most shipments will be entered formally with duties rather than free or minimal duties.
- 2Transitional timing:
- 3- For articles originating in China: changes take effect on enactment, with a narrow exception for shipments loaded onto a vessel or in transit to the U.S. during a 3-day window ending on enactment.
- 4- For articles originating in any other country: changes apply to entries on or after a date 120 days after enactment.
- 5Mandatory rulemaking and reforms:
- 6- Treasury must conduct a rulemaking process within 120 days to:
- 7- terminate privileges for entries previously allowed under 321(a)(2)(C) and adjust entry procedures accordingly.
- 8- upgrade data collection and entry procedures for informal entries, including requiring identification of HTS heading numbers (potentially at the 10-digit level) for goods entering under HTS Chapters 50–63.
- 9- ensure penalties and liabilities tied to informal entry are robust enough to deter fraud and improve accurate documentation.
- 10USPS and international postal shipments:
- 11- Treasury, in consultation with the Postmaster General, must determine fees and procedures to align USPS shipments with the treatment of other shipments, and may implement changes by regulation to harmonize practice.
- 12Enforcement and documentation:
- 13- The act emphasizes deterring unlawful or fraudulent activity and ensuring reasonable care in providing documentation, through updated regulations and guidance on penalties and liabilities.