Commercial Invoice: Requirements, CBP Valuation, and Penalties

A commercial invoice is the document U.S. Customs and Border Protection uses to identify, value, and assess duties on imported goods, and federal regulation 19 CFR 141.86 sets out exactly what it must contain.¹ The commercial invoice requirements cover who the parties are, what is in the shipment, what it cost, where it came from, and every charge that went into getting it to the U.S. port of entry. Miss a field and CBP has grounds to hold the shipment. Get a value wrong and the penalties can reach the full domestic value of the merchandise.

What Must Appear on a Commercial Invoice

Under 19 CFR 141.86, every commercial invoice submitted to CBP must include the following:

The names and addresses of the seller and the buyer, together with the time and place of sale.
The U.S. port of entry where the merchandise will arrive.
A detailed description of each item: its name as known in the trade, its grade or quality, and any marks or numbers the seller uses. Vague labels like “machine parts” invite inspection; specific descriptions do not.
Quantities in the weights and measures of the country of exportation or in U.S. units.
The purchase price of each item in the currency of the transaction.
The kind of currency used.
Itemized charges for freight, insurance, commissions, packing, containers, and any other cost incurred in bringing the goods from the foreign port to the first U.S. port of entry.
Any drawbacks, bounties, or rebates granted on export, listed separately.
The country of origin for each item.
The value of any assists the buyer provided that are not already reflected in the invoice price.

The importer of record also needs a unique identifier on the customs filing. U.S. businesses generally use their IRS Employer Identification Number, sole proprietors use a Social Security Number, and foreign entities may apply for a Customs Assigned Importer Number by filing CBP Form 5106.²

All values on the invoice and entry documents submitted to CBP must be converted to U.S. dollars, though the invoice may also show the transaction currency.³ CBP publishes periodic exchange rates that customs brokers use for conversion; using a different rate, even a more current one, can create a discrepancy that delays clearance.

How CBP Values the Goods on Your Invoice

The price shown on the invoice is the starting point for duty calculation, not necessarily the ending point. Federal law defines the customs value as the “transaction value,” meaning the price actually paid or payable for the goods when sold for export to the United States, plus several required additions.⁴ Those additions are:

Packing costs the buyer paid.
Selling commissions the buyer incurred.
The value of any assists.
Royalties or license fees the buyer must pay as a condition of the sale.
Proceeds from resale that flow back to the seller.

This framework comes from the WTO Customs Valuation Agreement, which establishes a uniform global basis for assessing duties.⁵ If your invoice price omits any of these categories, CBP adds them back in and the resulting duty bill will be higher than expected.

Assists

Assists are the valuation issue that trips up importers most often. If the buyer supplied the foreign manufacturer with tooling, molds, dies, engineering designs, or raw materials free of charge or at a discount, the value of those items must be declared on the invoice and added to the transaction value for duty purposes.⁶ A $5 widget that required $2 of buyer-supplied tooling really cost $7 to produce, and duties should reflect that.

One carve-out matters. Engineering or design work performed in the United States by a person acting as the buyer’s employee is not treated as an assist and does not need to be added.⁶ Failing to report assists doesn’t just raise the eventual duty bill when CBP catches the omission; it can trigger penalties for negligent or grossly negligent undervaluation.

Related-Party Transactions

When the buyer and seller are related, such as a parent buying from an overseas subsidiary, CBP scrutinizes the invoice price to decide whether the relationship influenced it. If the price is artificially low compared to arm’s-length sales, CBP will reject the declared transaction value and apply an alternative valuation method.⁷ Importers in that situation should keep documentation showing the price was set commercially, whether through comparable sales to unrelated buyers, industry pricing data, or a transfer pricing study.

Country of Origin

The country of origin field on the invoice determines which duty rates apply and whether the goods qualify for preferential trade agreements. When goods are entirely produced in one country, the answer is straightforward. When materials come from multiple countries, CBP applies the “substantial transformation” test: the country of origin is the last place where the product underwent a fundamental change in its form, appearance, nature, or character, not merely repackaging or minor assembly.⁸

Getting origin wrong is expensive in either direction. Claiming preferential origin when goods don’t qualify means underpaid duties and penalties. Failing to claim a valid preferential origin means overpaying duties you didn’t owe. Verify origin through manufacturing records or certificates of origin before the invoice is finalized.

Harmonized System Codes

Every item on a commercial invoice needs a Harmonized System code, a standardized numerical classification maintained by the World Customs Organization and used by over 200 countries.⁹ The first six digits are universal. The United States adds further digits in the Harmonized Tariff Schedule to create a ten-digit code that pinpoints the exact tariff rate.¹⁰

The HS code you assign controls the duty rate, so misclassification is one of the most consequential invoice errors. A product classified under the wrong heading may face a rate several percentage points higher or lower than the correct one. When CBP audits an entry and finds a misclassification, the importer owes the difference plus potential penalties. Importers unsure about the correct code can request a binding ruling from CBP before the shipment arrives.

Incoterms on the Invoice

Incoterms are standardized three-letter codes published by the International Chamber of Commerce that define where the seller’s responsibility ends and the buyer’s begins.¹¹ The current version is Incoterms 2020. The terms most commonly seen on commercial invoices include:

EXW (Ex Works): the seller’s obligation ends when goods are made available at their premises; the buyer arranges everything from pickup onward.
FOB (Free on Board): the seller delivers goods onto the vessel at the port of shipment, and risk transfers to the buyer once the goods are on board.
CIF (Cost, Insurance, and Freight): the seller pays freight and insurance to the destination port, though risk still transfers at the origin port.

The Incoterm matters for valuation because it tells CBP which costs are already inside the invoice price. A CIF invoice already includes freight and insurance, so those amounts sit inside the dutiable value. An FOB invoice does not include those charges beyond the loading port. State the Incoterm followed by the named place, such as “FOB Shanghai” or “CIF Long Beach,” so CBP knows what the declared price includes.

Every Shipment Now Needs a Full Invoice

Until mid-2025, shipments valued at $800 or less could enter the United States duty-free under the Section 321 de minimis exemption, often with minimal paperwork. That exemption has been suspended for virtually all shipments regardless of value, country of origin, or shipping method. All such shipments must now go through formal entry in the Automated Commercial Environment, subject to full duties, taxes, and fees.¹² For small importers and e-commerce sellers who previously moved low-value packages without one, the full commercial invoice requirements now apply to every shipment entering the country.

Federal Fees Calculated From Your Invoice Value

Duties aren’t the only charges pulled from the declared value on your invoice. The Merchandise Processing Fee is an ad valorem charge of 0.3464% of the shipment’s value, with a minimum of $33.58 and a maximum of $651.50 per entry for fiscal year 2026.¹³ It applies to nearly all formal entries and is adjusted for inflation each fiscal year.

The Harbor Maintenance Fee applies to cargo loaded or unloaded at designated U.S. ports and is set at 0.125% of the cargo’s value. The importer is liable at the time of unloading. Domestic shipments valued under $1,000 and cargo moving in bond for direct export are among the exemptions.¹⁴ Both fees run off the same declared value on the invoice, which is one reason undervaluation creates compounding problems.

Penalties for Invoice Errors

Federal law establishes three tiers of violations under 19 U.S.C. 1592, with penalties escalating based on the importer’s state of mind:

Negligence: up to the lesser of the domestic value of the goods or two times the lost duties. If the error did not affect duty amounts, the penalty caps at 20% of the dutiable value.
Gross negligence: up to the lesser of the domestic value or four times the lost duties. If duties were unaffected, the cap is 40% of dutiable value.
Fraud: up to the full domestic value of the merchandise, and CBP can seize the goods.¹⁵

Importers who breach their customs bond obligations may also owe liquidated damages equal to the value of the merchandise involved. That amount triples for restricted goods, prohibited merchandise, or alcoholic beverages.¹⁶ The line between a negligent typo and a fraudulent scheme often turns on whether the importer used “reasonable care” in preparing the invoice, a standard CBP applies broadly.

Fixing an Invoice After Filing

The main correction tool is the Post Summary Correction, a replacement entry summary. A PSC can be filed within 300 days of the date of entry or up to 15 days before the scheduled liquidation date, whichever comes first. CBP automatically rejects corrections filed outside those windows.¹⁷ A PSC will not process until fully paid, and it cannot be submitted while the entry is under CBP review or after liquidation. If the entry has already been liquidated, the remaining options are a protest or a prior disclosure.

Prior disclosure is the strongest tool an importer has when facing a potential penalty. Voluntarily reporting a violation before CBP starts a formal investigation drops the penalty for negligence or gross negligence to interest on the unpaid duties. Even for fraud, prior disclosure caps the penalty at 100% of the lost duties rather than the full domestic value of the goods.¹⁵ The catch is timing: if CBP has already begun investigating, the importer must show they lacked knowledge of that fact.

Record Retention

Every record related to a customs entry, including the commercial invoice, must be kept for five years from the date of entry.¹⁸ CBP can request those records for audits, penalty assessments, or compliance reviews at any point in that window. Importers who can’t produce the invoice and supporting documents when asked face an uphill fight in any dispute over valuation, classification, or origin.

1
eCFR. 19 CFR 141.86 – Contents of Invoices and General Requirements
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U.S. Customs and Border Protection. Importer Numbers
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U.S. Customs and Border Protection. What Value Should Be on the Commercial Invoice Submitted to U.S. Customs and Border Protection?
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Office of the Law Revision Counsel. 19 US Code 1401a – Value
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International Trade Administration. Trade Guide – Customs Valuation
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eCFR. 19 CFR 152.102 – Definitions
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U.S. Customs and Border Protection. Determining the Acceptability of Transaction Value for Related Party Transactions
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International Trade Administration. Rules of Origin – Substantial Transformation
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World Customs Organization. What is the Harmonized System (HS)?
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International Trade Administration. Harmonized System (HS) Codes
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International Chamber of Commerce. Incoterms Rules
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The White House. Suspending Duty-Free De Minimis Treatment for All Countries
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Federal Register. Customs User Fees To Be Adjusted for Inflation in Fiscal Year 2026
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eCFR. 19 CFR 24.24 – Harbor Maintenance Fee
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Office of the Law Revision Counsel. 19 US Code 1592 – Penalties for Fraud, Gross Negligence, and Negligence
16
U.S. Court of International Trade. Customs and Border Protection Civil Monetary Enforcement Process
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U.S. Customs and Border Protection. Post Summary Correction
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eCFR. 19 CFR 163.4 – Record Retention Period