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 party may use statistical sampling to ‘disclose the circumstances of a violation’ and for calculation of lost duties, taxes, and fees for purposes of a prior disclosure."
The comment period for this proposed regulation ended on December 21, 2009, and a Final Rule is soon to be issued by U.S. Customs. I look forward to U.S. Customs implementing the new regulations.