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Custom Duties


Custom duties are charges or taxes collected by the federal government on goods brought into the United States from other countries. The tax rates are computed as a percentage of the price of the goods.

An agency of the Department of the Treasury, the U.S. Customs Service was established in 1789 to levy and collect custom duties. Prior to the advent of personal income taxes in the 1910s, various duties provided most of the federal government's revenue. In the 1990s the Service administered seven regions in the United States, Puerto Rico, and the Virgin Islands. Within the seven regions there are 300 ports of entry where agents inspect the baggage of all travelers returning from foreign countries. Returning travelers must declare any articles brought in from abroad. "Declare" means to identify and state the dollar value of the article. Amounts up to $400 are exempt from any duty tax. Amounts over $400 incur a duty. An individual may only claim the $400 exemption once every 30 days. Also, the individual's trip abroad must have lasted at least 48 hours. Trips to Mexico or the Virgin Islands do not fall under the 48-hour rule. If the traveler is not able to claim the $400 exemption because of the 30 day period or the 48-hour rule, they can claim a $25 exemption but must pay duties on all values over $25.

Customs prohibits illegal drugs, dangerous weapons, and obscene publications from entry into the United States. Custom duties produced little federal revenue in the 1990s, but they served as an important policing tool in preventing smuggling and enforcement of many federal laws concerning illegal substances.

See also: Tariffs

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