Best PracticesCBP

File Your Petitions Timely, Or Else…

posted by Jennifer Diaz March 6, 2013 0 comments

As of January 9, 2013, Customs and Border Protection (CBP) is making procrastinators pay the price for filing untimely petitions that seek relief from liquidated damages. CBP amended it’s guidelines for the cancellation and mitigation of claims for liquidated damages in cases where petitioners are late in filing claims for relief. Additionally, CBP also changed the formula for calculating late petition mitigation.

Current Rule for Timely Petitions

Under the existing regulatory authority, in order to be considered timely, petitions for relief in response to claims for liquidated damages must be filed:

  • A.    By bond principals within 60 days from the date of mailing of the notice of liquidated damages (see 19 C.F.R. 172.3(b)) or any lawful extension thereof; or
  • B.     By sureties within 60 days of the demand for payment by CBP (see 19 C.F.R. 172.4) or any lawful extension thereof.

When circumstances so warrant, extensions of the time period to file a petition may be granted by the FP&F Officer (FPFO) if such an extension of time is requested during the 60-day period available for timely filing a petition (see 19 C.F.R. 172.3(c)). The amendment to the current rule does not allow a petition for relief to be considered if it is filed after (a) the commencement of sanctioning action against the bond principal or (b) the issuance of a notice to show cause against the surety.

A party responsible for a liquidated damages claim may submit an offer in compromise to CBP pursuant to 19 U.S.C. § 1617 and 19 C.F.R. 161.5. These new guidelines, which will be applicable to all liquidated damages claims for which a late petition is filed on or after Jan. 9, are applicable only to petitions for relief and do not apply to offers in compromise submitted pursuant to 19 U.S.C. 1617 and 19 C.F.R. 161.53.

Consequently, the new mitigation guidelines concerning untimely petitions will impose a more stringent standard. Untimely petitions will be accepted or considered only if the petitioner is able to demonstrate the existence of extraordinary circumstances that prevented the petitioner from filing a timely petition or timely seeking a lawful extension of time in which to file a petition. What does that mean? The FPFO will exercise his or her discretion in determining whether circumstances existed so as to warrant CBP’s consideration or acceptance of a late petition.

Untimely Petitions will NO longer be Accepted

Subject to the permitted exceptions, no untimely petition will be accepted in any circumstance if it is filed:

  • a.         More than 180 days after the date of mailing of the notice of claim to the bond principal, or in the case of a surety, the date of mailing of the first demand on surety;
  • b.         After the petitioner has previously submitted a petition in the same case and/or been offered mitigation in the same case, and such mitigation amount was not paid within the prescribed period;
  • c          After the claim has been referred to Office of Chief Counsel for collection action;
  • d.         After the commencement of sanctioning action against the bond principal; or
  • e.         After the issuance of a notice to show cause against a surety.

CBP notes that (a) an untimely petition is not a supplemental petition described in 19 C.F.R. 172.41, (b) a supplemental petition must be timely filed following a decision on an original petition filed in accordance with the established regulatory time frames, (c) the rejection of an untimely petition does not constitute a “decision” for purposes of 19 C.F.R. 172.41, and (d) petitions that are filed untimely and not accepted for consideration will be rejected. A party responsible for a liquidated damages claim may submit an offer in compromise to CBP pursuant to 19 U.S.C. § 1617 and 19 C.F.R. 161.5.

The Exceptions…

However, untimely petitions for relief of liquidated damages claims issued for the late filing of an entry summary, the late payment of estimated duties (including under the periodic monthly statement test), the late payment of passenger processing fees or the late filing or late payment of reconciliation entries may be accepted without regard to the limitations expressed in paragraphs a and b above at any time prior to the circumstances described in paragraphs c through e.

New Mitigation Calculation for Late Petitions

CBP has also implemented a new calculation for mitigating liquidated damages for untimely petitions. In calculating the mitigated amount on a late petition, CBP will first determine the base amount (i.e., the amount of mitigation that would have been afforded on a timely petition). CBP will then determine the “additional mitigation amount” by multiplying the full assessed amount of the claim by 0.1 percent (.001) and then multiply by the number of days the petition is late (i.e., .001 times the number of days late times the full assessed claim amount.) The product will be the additional amount which will be added to the base amount to produce the mitigated amount applied to the untimely filed petition. In no case will the additional mitigated amount to be added to the base amount be less than $400. For example, a $100,000 liquidated damages claim for which a petition is filed 30 days late will be mitigated to the amount provided by the guidelines plus an additional amount calculated by the new formula (30 days late x .001 = .03 x 100,000 = $3,000 added charge.) 

Bottom line, assure you have an expert Customs attorney assisting you to fight for mitigation of Liquidated Damages claims, and file your Petitions TIMELY!

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