March 2010

For any importer of commercial cargo into the United States, there are numerous U.S. Customs requirements to consider such as declaring the correct tariff classification, customs valuation, and country of origin.  Sometimes, an importer (or its customs broker) makes a mistake. If the mistake is not corrected by the importer timely with U.S. Customs, the mistake may result in a fraud penalty by U.S. Customs against the importer.  We’re talking about a lot of money.

Under 19 U.S.C. 1592, that penalty amount may be equal to the total value of the imported merchandise.  Fortunately, U.S. Customs has a “prior disclosure” procedure set forth at 19 CFR 162.74 for importers to advise U.S. Customs of a mistake before U.S. Customs learns of it and initiates its own investigation.

Importers thinking of making a Prior Disclosure to U.S. Customs should carefully consider a Federal Register Notice by U.S. Customs issued on October 21, 2009 entitled “Use of Sampling Methods and Offsetting of Overpayment and Over-Declarations in CBP Audit Procedures; Sampling Under Prior Disclosure”  Although not yet a Final Rule, it does affect how importers should calculate lost revenue in making a prior disclosure. Moreover, it affects how U.S. Customs will calculate lost revenue and monetary penalties under 19 U.S.C. 1592.

The propose regulation would explicitly provide “for the use of sampling methods in audits conducted by CBP under 19 U.S.C. 1509.” A new subsection 162.74(j) “Prior Disclosure Using Sampling” would be added to the U.S. Customs Regulations. That regulation specifically would state that “A private […]

Air and ocean carriers often unintentionally transport aliens into the United States who do not have a valid passport and/or an unexpired visa.  Carriers receive a fine from U.S. Customs and Border Protection of $3,000 for every such alien illegally transported.  Carriers get an automatic reduction of 50% of the fine by signing a Memorandum of Understanding (MOU) with U.S. Customs.  Carriers must obtain and submit a newly revised MOU to U.S. Customs on April 23, 2010.

On February 22, 2010, U.S. Customs issued a General Notice that all air and ocean carriers which had signed an MOU with either the former U.S. Immigration and Naturalization Service or U.S. Customs will no longer be effective. Only by submitting a new Fines Mitigation MOU countersigned by U.S. Customs Headquarters may fines be automatically reduced.  Carriers need to prepare now to comply with the many new changes in the MOU.

The new MOU has many changes, but the essential paragraph 3.10 still provides:

The Carrier shall maintain a reasonable level of security designed to prevent passengers from circumventing any Carrier document checks.  The Carrier shall also maintin an adequate level of security designed to prevent stowaways from boarding the Carrier’s aircraft or vessel.

Without the new MOU, fines will be issued against the carrier by U.S. Customs for violating the Immigration and Nationality Act, 8 U.S.C. 1323.   Reduction of the fine greater than 50% may be obtained by the carrier when a violation occurs by establishing that further mitigating or extenuating circumstances exited at the time of the […]