Should You File A Prior Disclosure In 2023?

• Jurisdiction: United States,Federal
• Law Firm: Braumiller Law Group, PLLC
• Subject Matter: Corporate/Commercial Law, International Law, Litigation, Mediation & Arbitration, Corporate and Company Law, International Trade & Investment, Trials & Appeals & Compensation, Professional Negligence
• Author: Ms Adrienne Braumiller and Harold R. Jackson
• Published date: 08 February 2023

2023 is more than a brand-new year - it is an opportunity for your company to prioritize supply chain and customs compliance. For some companies, this means filing a prior disclosure with U.S. Customs and Border Protection (CBP). Companies that are frequent importers are seriously considering disclosing entry violations under the condition that Customs will not issue civil penalties against them.

How has your company grown or changed over the past year? How much turnover has there been in entry, logistics, or compliance? Does your company import products that could be classified under more than one of the recently updated HTS codes? What about one of the many variable Antidumping or Countervailing Duty Orders? Are you confident in the basis of the dutiable value reported to U.S. Customs and Border Protection (CBP) for the merchandise? Have you started receiving CF-28's requesting information on classification, value, or more? You could have some discrepancies in your import reporting to CBP - and if so, the agency can legally go after you for the duties, plus interest, and additional Customs penalties that often reach into the millions for the past five years.

What are Customs Penalties?

The statute - 19 USC ' 1592 - provides that Customs can issue civil penalties against an importer for any "attempt to enter or introduce any merchandise into the commerce of the U.S. by means of any document or electronically transmitted data or information, written or oral statement, or act which is material and false, or any omission which is material." Under the statute, Customs can issue these civil penalties in addition to any loss of revenue to the government as a result of underpaid duties for the past five years, plus interest. The amount of civil penalties depends on the domestic value of the merchandise, the loss of revenue, and the level of culpability established by CBP.

An act or omission is fraudulent if a material false statement, omission, or act in connection with the transaction was committed (or omitted) knowingly, i.e., was done voluntarily and intentionally, as established by clear and convincing evidence, i.e., double invoicing. Customs may assess a penalty that is the domestic value of the merchandise. Note that the domestic value can be different from the entered valued under 19 USC 1401a; domestic value is the price that the merchandise or similar property is freely offered for sale at the time of entry, as described under 19 CFR 162.43.

Customs will find gross negligence where a violation results from an act or acts (of commission or omission) done with actual knowledge of or wanton disregard for the relevant facts and with indifference to or disregard for the offender's obligations under the statute. This is highly fact specific and often different results on a case-by-case basis, i.e., companies have received gross negligent penalty...