Customs Law Advisory - US Customs Increases Attention to Bond Compliance for Importers

US Customs Increases Attention to Bond Compliance for Importers
In the past few months, U.S Customs and Border Protection (“Customs”) has issued detailed descriptions of, and some amendments to, its policies regarding import bonds.  For many importers, bonds can be a neglected area of import compliance.  However, Customs’ recent statements suggest increased attention may be in order.  If bond coverage is too low, the importer may be at risk for unexpected shipment delays, or worse, Customs enforcement action.  If bond coverage is too high, or duplicative, the importer may be incurring unnecessary expense.

All commercial importers are required to have a bond, issued by a surety approved by the Department of the Treasury.  If an import requirement goes unmet, Customs may secure payment from the surety up to the bond amount and the surety will act to recover from the importer.  Usually, the importer’s customs broker arranges for the bond with the surety, charging the bond premium to the importer.  Nonetheless, like most Customs compliance requirements, the ultimate responsibility for proper bond procedures rests with the importer, not the broker.

The price paid by the importer for a bond is usually a fraction of the amount of coverage and will depend on the importer’s credit and relationship with the surety.  Importers may choose a single entry bond, which must cover the total of the entered value, plus all duties, taxes and fees owing on a particular shipment.  However, most commercial importers use a continuous bond covering multiple entries.  This type has received most of Customs’ recent attention.

Customs recently released a description of amended policies for calculating continuous bond amounts.  Customs now requires continuous bond amounts to be set at 10% of the importer’s duties, taxes and fees paid in the previous 12 months (formerly the prior calendar year).  Moreover, Customs now requires that the bond amount include all unprotested bills more than 120 days old and any amounts for which a protest was denied.  In addition, Customs has announced special bond rules for agricultural and aquacultural merchandise subject to any antidumping or countervailing duty order (such as garlic or shrimp from certain countries).  The calculated bond amount must be rounded up by increments of $10,000, until reaching $100,000, then by increments of $100,000 thereafter.  The minimum amount for any bond is $50,000.

Customs also recently announced additional rules for its “Bond Centralization Program.”  This program allows importers to file their continuous bond at a central Customs office rather than at multiple ports.  For Customs, the program provides uniformity, more certainty regarding bond sufficiency and consistent application of bond policies.  For importers, the program can create convenience, easier monitoring of bond sufficiency and can reduce the expense of duplicative bond premiums at multiple ports.  Customs’ centralization program rules require that the bond application be received at least 5 business days before the desired effective date.  Moreover, where an importer is terminating an existing continuous bond and replacing it with another, the change should be filed both at the local port and with the centralization program team at least 20 days prior to the desired effective dates.

Customs’ recent attention to this area serves as a reminder that importers should always include bonds in their regular Customs compliance review.  If you have any questions regarding Customs bonds, please contact Greg McCue at (202) 429-6421.