Import Compliance

What Is Import Compliance?

The U.S. government requires all importers to meet recordkeeping standards and reporting when importing goods into the U.S. The U.S. Customs and Border Protection (CBP) requires all importers to provide information about importing items to protect national security and receive payments for tariffs.

Import compliance has many regulatory requirements, but there are four main parts to an importer’s compliance responsibilities:

  1. Valuation: What is the price paid for the goods that are imported? Companies need to report all fees, costs, and pricing changes.
  2. What Is It?: You need to define your imported goods based on the Harmonized Tariff Schedule of the U.S. (HTS). You must assign an HTS code based on the country of origin, and this information establishes duty rate and trade statistics for imported goods.
  3. Country Of Origin: Country of Origin is more than just listing where your shipment is from. CBP uses this information to increase or decrease duty based on several factors.
  4. Quantity: You need to report the number of imported goods to meet your compliance responsibilities. HTS outlines which unit of measure needs to be reported when filing an import declaration.

Customs compliance is an ongoing process, and import compliance is not a “set it and forget it” part of your business. The CBP is a lot like the IRS because when the CBP audits a company’s import compliance program, they need to make sure they are paid.

As you can imagine, each part of import compliance carries its level of complexity. It would be best to consider free trade agreements, vendors, and party screening when creating a comprehensive import plan.

Instead of risking penalties and fines, many companies look to compliance experts like our team at Export Solutions to support their customs compliance efforts. Your business could be at risk if you have any loose ends, so make sure you maintain perfect import compliance programs to keep your business running smoothly!

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Types & Amounts Of Import Non-Compliance

If your company relies on imported goods to maintain your supply chain, you need to follow all import regulations to protect your company’s future. Customs compliance can severely impact your company’s operations, and if import compliance is not maintained, your company could face severe penalties and fines.

Customs has outlined penalties and fines for failing to meet customs compliance requirements in 19 U.S.C. § 1592. Under this statute, Customs can apply monetary and fines based on the severity, type, and history of the importing company.

Government agencies render different fines and penalties based on the merchandise of duties, taxes, and fees. Customs also has three levels of blame that they use when determining the severity of non-compliance:

  • Negligence: Customs will find you negligent if your company fails to exercise reasonable care and competence required from a compliance procedure. Clerical errors do not constitute negligence, and unintentional electronic errors may not result in negligence.
  • Gross Negligence: This level of culpability means that importing goods was done with knowing adding false information or omitting relevant facts from CBP while importing goods.
  • Fraud: This is the most severe culpability level because it means that an importer knowingly provided false statements or omitted information from regulatory agencies.

Importing goods means that all parties, directly and indirectly, must meet all import regulations to meet compliance requirements. In the past, importers would be solely liable if importing requirements were not met. However, in recent years, U.S. courts have found that individuals who are not the importer of record can be held liable for non-compliance.

Common Trade Compliance Program Mistakes

Your business needs a comprehensive import compliance program if your supply chain relies on international trade and imported goods. Import regulations are continually changing, and the U.S. government requires importers to meet strict guidelines at each import process stage.

The U.S. Customs and Border Protection (CBP) have made it clear that importing goods rests on the importer. International trade is a complicated process that can significantly impact each step in your supply chain and business process.

An import compliance program needs to adapt to government agencies’ changes each year, and all imported goods must be classified and reported accurately to ensure tariffs, duties, and other regulatory requirements are met.

Some importers choose to handle their import compliance program in-house. While this is a safe bet for some companies, other companies make this decision based on some urban myths surrounding U.S. import compliance like:

1. Import Compliance Takes Too Much Time

One of the main reasons we hear from companies for letting their compliance slip is that it takes too long to build and maintain a trade compliance program.

While it is true that a program can take time to develop, and it needs to be maintained, the truth is that a program can help your shipments move more quickly through Customs. This means that you can save time with a comprehensive Import Compliance program.

2. Trade Compliance Costs Too Much

Putting together a compliance program will cost your company, which usually comes in hiring an outside import consulting team. While there is an initial investment, this payment will go a long way as you avoid the cost of penalty actions.

Importers hold all aspects of their business operation, and negligence can add up to millions of dollars and lost productivity.

This means that not being compliant can cost you more than going through the process to ensure your company is not violating any regulations.

3. Customs Won’t Bother Me

You may think that you can continue to operate as you have in the past because Customs has not penalized you yet. However, this mentality is dangerous because you will have to pay a steep penalty once you receive a violation. Your business could suffer from long-term consequences that will hit your bottom line.

The truth is that Customs has a variety of Quick Response Audits that they can use to target a single issue for any importer of any size. When you are caught, you will experience costly fines, and your products will get caught up at the border- this can cause your business to look bad and sour your customer relationships.

4. Our Broker Handles Everything

If you work with a broker, you may think that this professional is responsible for your business imports. However, the truth is that you are responsible for all aspects of your entry as outlined under 19 USC 1484.

This means that you need to understand all aspects of your trade compliance, and therefore you should only work with import consultants that you trust!

While Customs will apply penalties based on each violation’s severity, the CBP has a standard amount of fines. One way most companies violate trade compliance is when they make a mistake with entry filings.

Entry Filings And Import Compliance

Whenever an item enters the U.S., the importer or record of paying duties, file entry documentation, and receive authorization from CBP before a shipment can be released from the port of entry.

As you can imagine, filing entry documentation can be complicated depending on the goods, country of origin, etc. While importers need to consider a host of variables throughout the import process, entry filings need to include:

  • Valuation: Importers are responsible for reporting the price they paid for goods, and they must declare all payments (direct and indirect) that were made throughout the transaction.
  • Description & Tariff Classification: All goods entering the United States must be described accurately and have their respective tariffs classified. These requirements protect national security and provide the CBP with information to determine the number of paid duties.
  • Intellectual Property Rights: Imported goods and packaging can’t infringe on trademarks or copyrights.
  • Country of Origin: All materials and goods must include markings to identify where merchandise originated from. The CBP uses this information to apply duty rates, role admissibility, and quotas.

Manage Your Import Compliance Risk

Import compliance programs are a great way to standardize import compliance throughout your entire business. Importing goods to the U.S. puts all responsibilities of import compliance on your team, and you must meet all regulatory requirements outlined by the CBP and other government agencies.

Your company needs to remain vigilant in all areas of customs compliance. Whether you import thousands of shipments a year, or your business only accepts a dozen shipments, you need to keep tight recordkeeping practices.

The trade consultants at Export Solutions have the years and experience that you need to protect your company from costly fines and penalties. Our team will work with you to ensure your business processes and functions are compliant with relevant trade regulations.

Compliance means that your company will save time and money in the long run since Customs can audit your business to find inaccuracies or classification errors. These violations can land you with hefty fines and substantial penalties that hit your bottom line.

Talk to our team today to learn how to help you and help you reach your business goals today!

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Import Compliance FAQs

What is import compliance?
Import compliance has many regulatory requirements, but there are four main parts to an importer’s compliance responsibilities.

What are the requirements for importing into the United States?
The CBP is a lot like the IRS because when the CBP audits a company’s import compliance program, they need to make sure they are paid.

What happens if I violate import compliance regulations?
Customs has outlined penalties and fines for failing to meet cusstoms compliance requirements in 19 U.S.C. § 1592.