BRO-4-RR:IT:EC 115616 GG
Ms. Maria Kavanaugh
Livingston International Inc.
352 Sonwil Drive
Buffalo, New York 14225
RE: Modification of HQ 222743; Facsimile Copy of Power of Attorney; Requirement to Produce Original
Dear Ms. Kavanaugh:
This is in response to your ruling request, dated January 15, 2002, in which you ask us to modify a ruling that had been previously issued on the topic of facsimile powers of attorney. The ruling in question is HQ 222743, dated July 16, 1991.
FACTS:
HQ 222743 explored the issue of whether a broker must first receive the originally executed power of attorney from a client before transacting customs business on the client’s behalf, or whether the broker may proceed upon receipt of a facsimile (faxed) power of attorney.
In arriving at an answer, the ruling examined the requirement set down in 19 CFR §141.46 that a customs broker obtain a power of attorney before transacting customs business in the name of his principal. Under that regulation, the broker need not file the power with Customs, but must retain it with his records and make it available to Customs.
HQ 222743 also discussed 19 CFR §111.23(d), which provided in pertinent part that “while original powers of attorney must be retained, copies also may be retained.”
The ruling held that a broker may satisfy the requirement of 19 CFR §141.46 to retain powers of attorney by keeping a faxed copy of the original power transmitted to him by the importer, provided the original document could be produced if necessary to Customs within a reasonable period of time. The current ruling request seeking modification of HQ 222743 contends that the recordkeeping regulations put into place in 1998 would allow the continued use of faxed powers of attorney, but rendered the requirement that the original be produced within a reasonable time obsolete.
ISSUE:
Whether the recordkeeping regulations of 19 CFR Part 163 eliminated the requirement, described in HQ 222743, that a broker conducting customs business under authority of a faxed power of attorney produce the original power of attorney upon request within a reasonable time.
LAW AND ANALYSIS:
On December 8, 1993, the President signed into law the North American Free Trade Agreement Implementation Act, Public Law 1033-182, 107 Stat. 2057. Title VI thereof contained provisions pertaining to Customs Modernization and thus is commonly referred to as the Customs Modernization Act or “Mod Act”. Sections 614, 615 and 616 of the Mod Act amended sections 508, 509 and 510 of the Tariff Act of 1930, as amended (19 U.S.C. 1508, 1509 and 1510) which pertain to recordkeeping requirements applicable to importers and others. Regulations implementing these amendments took effect on July 16, 1998. See Treasury Decision (T.D.) 98-56.
The resulting regulations had no effect on 19 CFR §141.46, but eliminated 19 CFR §111.23(d). Now, section 111.23(a) directs brokers to retain records “in accordance with the provisions [of 19 CFR Parts 111 and 163].” Part 111 specifies the location where brokers must keep their records, and also sets forth the retention periods for various records. However, one must turn to Part 163 of the Customs Regulations for guidance on the format in which powers of attorney must be retained and produced for inspection.
Part 163 establishes the recordkeeping requirements for, among other things, entry records. Entry records are defined in 19 CFR §163.1 as those records which appear on the “(a)(1)(A)” list. The (a)(1)(A) list appears in the Appendix to Part 163. Powers of attorney are included on the list. Consequently, they are entry records subject to the requirements of Part 163.
Section 163.5 of the Customs Regulations provides that persons required to keep records:
[S]hall maintain all records required by law and regulation for the required retention periods and as original records, whether paper or electronic, unless alternative storage methods have been adopted in accordance with paragraph (b) of this section. The records, whether in their original format or under an alternative storage method, must be capable of being retrieved upon lawful request or demand by Customs.
The term “original records” is defined in 19 CFR 163.1(h) as follows:
Original. The term “original”, when used in the context of maintenance of records, has reference to records that are in the condition in which they were made or received by the person responsible for maintaining the records pursuant to 19 U.S.C. 1508 and the provisions of this chapter, including records consisting of the following:
Electronic information which was used to develop other electronic records or paper documents;
Electronic information which is in a readable format such as a facsimile paper format or an electronic or hardcopy spreadsheet;
In the case of a paper record that is part of a multi-part form where all parts of the form are made by the same impression, one of the carbon-copy parts or a facsimile copy or photocopy of one of the parts; and
A copy of a record that was provided to another government agency which retained it, provided that, if required by Customs, a signed statement accompanies the copy certifying it to be a true copy of the record provided to the other government agency.
(Emphasis added)
It is clear upon reviewing §163.1(h)(2) that records received by the recordkeeper in facsimile format now qualify as “original records.” Thus, a power of attorney faxed to a broker is an original record. A broker would be able to transact customs business for a client upon receipt of such a fax, and would meet recordkeeping maintenance requirements by maintaining that fax in his records. The new regulations thus to this extent have not altered the result reached in HQ 222743. However, it remains to be seen whether they eliminated the requirement imposed by HQ 222743 that brokers operating under authority of a faxed power of attorney produce the instrument executed by the client when Customs asks to see the power of attorney.
Section 111.25 of the Customs Regulations requires brokers to produce records which are subject to the requirements of Part 163 “in accordance with the provisions of that part”. As noted above, 19 CFR §163.5(a) requires recordkeepers, upon demand or request by Customs, to produce records in their original or alternative storage format. Accordingly, a broker who received a facsimile power of attorney from a client will only have to produce the power in its facsimile or alternative format. He will no longer have to obtain from the client the instrument as executed by the client. The amendment to the Customs Regulations in 1998 thus effectively modified the holding in HQ 222743 relating to the production of the originally executed instrument.
The notice and comment procedures of section 625(c)(1), Tariff Act of 1930 (19 U.S.C. 1625(c)(1)), as amended, do not apply to this ruling, because the modification of HQ 222743 resulted from an earlier amendment to the Customs regulations, not from the issuance of this ruling.
HOLDING:
The recordkeeping regulations of 19 CFR Part 163 require recordkeepers to maintain and produce original records, unless an alternative storage method is used, in which case maintenance and production of the records in their alternative format is acceptable. Documents received by the recordkeeper in a facsimile format qualify as “original” records. Consequently, a broker in receipt of a faxed power of attorney will no longer be required to obtain the actual instrument executed by the client when Customs requests production of the power of attorney. The implementation of the Part 163 recordkeeping regulations in 1998 modified HQ 222743 accordingly.
Sincerely,
Larry L. Burton
Chief
Entry Procedures and Carriers Branch