The e-merchant’s guide to Section 321

Section 321 is part of the Tariff Act that allows shipments that are at low value to enter the US without the typical fees such as tax and duty associated with importation.

In other words, Section 321 allows you to import stocks at a much lower cost. In the past, the maximum value to enter the U.S duty-free was $200. Today, sometimes referred to as “de minimis” shipment, allows goods as much as $800 to pass through U.S border free of charge.

Imports that meet the requirements can overtake the extensive paperwork that often times are required in traditional shipment. All in all, Section 321 can help your business save both money and time. 

Trethowans
Trethowans

A few things to keep in mind when filing for Section 321 are:

  • Filing for Section 321 is NOT required but rather a choice.
  • Only one claim is allowed per day.
  • All necessary information is accurate.

For your business, if you want to send multiple shipments per day, you need to ensure you are not making several claims in a single day. Ideally for multiple shipments, further logistics is required. It is also important to note that all information is accurate when filing for Section 321 to avoid costly penalties or confiscation of goods. 

Overall, if your business is looking for ways to increase profit margins, Section 321 is a good path to take. 

Three major benefits of Section 321

There are three main benefits of Section 321.

1) Avoid delays

One of the greatest advantages of using Section 321 with a maximum value of $800 of qualifying goods is the reduced paperwork requirement. With the logistics normalized for qualifying shipment, your items can pass through US customs without delays and limited paperwork since majority of the necessary information is already automated by fulfillment services. 

2) Reduced shipping costs

This is a cost-saving shipping method with many perks including: subtracting taxes, fees and duty expenses that are traditionally charged on imported goods. 

3) Boost company competitiveness

Finding items from overseas that can be profitable to import to give your brand a competitive edge is what all business owners’ want.

One great example is when you want to import goods from China. These goods were once heavily taxed but with Section 321, the cost is reduced by many folds. Plus with Section 321 the goods are also available much faster via advanced customs clearance. 

Import tax exemptions using Section 321

How does Section 321 alleviate imported taxes of goods from overseas? The shipments of foreign goods are first redirected through Canada, rather than directly into the US. Next, Canada acts as an intermediary and receives the order then ships it through the US border.

Lastly, the large shipment is then broken down into smaller shipments to be sent out. This final step allows you to get cheap imported goods under Section 321. At the end, the total payment that you pay to your fulfillment partner is usually much less than the tax value itself that you would pay through traditional shipment. 

Limitations under Section 321

The major limitation associated with Section 321 is the maximum cost your imported goods must be from Canada to US. As mentioned above, that limit is $800. Section 321 also states that it does not matter where the product is coming from as long as the value does not exceed that $800 mark.

If the sum of imported good exceeds this limitation than the Section 321 exemption will not apply. An easy way to get around this would be to break down the shipment into smaller shipments and have a flow of orders, also keeping in mind, only one claim can be made by an individual and/or company per day. 

The other limitation that was briefly mentioned already is the cost of the fulfillment partner. But at the end of the day, the amount of cost you will be paying to the partner would be far less than the tax itself.