As per this recent post over on the C.H. Robinson blog, the U.S. Customs and Border Protection (CBP) is stepping up enforcement of customs compliance. It’s not just looking for fraud, but for poor record-keeping, mistakes, and uncorrected discrepancies that will allow up to impose fines of up to $10,000, penalties of up to 8 times the value of the loss of duty on dutiable items, and penalties of up to 80% of the value of non-dutiable items which allow the CBP, and the U.S. Government, to fill its coffers at your expense. Just like ignorance of the law is no excuse, neither is an innocent mistake.
And while you can’t prevent an audit, you can prevent a fine and a penalty by making sure you don’t make any of the nine-common trade-related errors the CBP will get you on and, in a few cases, taking extra steps to limit what can be held against you. To minimize fines and penalties,
- Report Manufacturing Assists which are dutiable (at cost).
- Have a system and process in place to verify the mainfest immediately after the ship is loaded.
If there are additional, missing, or damaged items, and the price is modified, the price you are actually going to pay needs to be reported.
- Be sure not to include dutiable costs! While you will be refunded duty overpayments, you can also be fined $10,000 for a record-keeping error!
- Don’t screw up the country of origin. It’s not necessarily the exporting country. It may ship from China, but it could be manufactured in Myanmar and Vietnam.
- Get the HTS code right. Hire a consultant or acquire an import trade tool if you have to, because if you get this wrong, here’s where the 8X penalty comes into play!
- If claiming Free Trade, make sure you have the arguments, documentation, and, if they exist, previous determinations or rulings to back it up.
- If you are re-importing goods into the US (HTS 9801 & 9802), be sure to have tangible proof of US manufacturing and a full chain of custody that demonstrates no advance while abroad.
- Don’t screw up the amounts claimed in a related-party transaction.
Just because you trade goods for $1 does not mean this is the value you can claim when calculating duty.
- Keep exactly 5 years of records. You have to keep five years, or get fined, but if you have more than 5 years, you are just giving the CBP more records to go through to find problems.
Will this completely eliminate your risk? No, but it will greatly reduce it!