CBP Prior Disclosure of Import Violations Letter

Summary

This CBP Prior Disclosure of Import Violations letter may be used by a U.S. importer of merchandise to voluntarily report import violations to the U.S. Customs and Border Protection (CBP) to limit its exposure to penalties that may arise pursuant to 19 U.S.C. § 1592. This template includes drafting notes, practical guidance, and alternate clauses. 19 U.S.C. § 1592 prohibits any person from engaging in fraudulent or negligent activity that could deprive the U.S. government of any fee, tax, or duty it may otherwise be entitled to by reason of such party's importation activities. Examples of potential Section 1592 violations include: • Inaccurate descriptions of imported merchandise on invoices • Undervaluation of imports • Evasion of antidumping or countervailing duties • Inaccurate country of origin declaration • Inappropriate claims for duty preferences Regardless of whether an importer's error results in any loss of revenue to the U.S. government, the CBP is entitled to assess penalties under Section 1592 against any person or entity that either imports or attempts to import merchandise into the U.S. using any document or other data that is materially false (including by way of omission) or assists another person or entity to do so. Section 1592 outlines the maximum penalties depending on the type of violation: • Fraud. Acts of fraud can result in a civil penalty equal to the domestic value of the merchandise. • Gross negligence. Acts of gross negligence can result in a civil penalty equal to: ○ the domestic value of the merchandise, or four times the lawful duties, taxes, and fees owed to the United States (whichever is less); or ○ if the violation did not affect the assessment of duties, 40 percent of the dutiable value of the merchandise. • Negligence. Acts of negligence can result in a civil penalty equal to ○ the domestic value of the merchandise, or two times the lawful duties, taxes, and fees owed to the United States (whichever is less); or ○ if the violation did not affect the assessment of duties, 20 percent of the dutiable value of the merchandise. 19 U.S.C. § 1592(c). This template incorporates the requirements for a valid prior disclosure pursuant to 19 C.F.R. § 162.74, which will help limit any penalty imposed. See 19 U.S.C. § 1592(c). Counsel should note that prior disclosures can be made orally (19 C.F.R. § 162.74(a)(1)). Pursuant to 19 C.F.R. § 162.74(d)(3), oral disclosures shall be deemed to have been made at the time that the CBP was provided with the information in accordance with 19 C.F.R. § 162.74(b). Counsel should note, however, that written disclosures are recommended wherever practically possible to avoid a conflict regarding the scope and details provided to the CBP by the importer. Additionally, oral disclosures are required to be followed up in writing within 10 days pursuant to 19 C.F.R. § 162.74(a)(2). For a checklist on creating and sending a prior disclosure letter to the CBP, see CBP Prior Disclosure of Import Violations Checklist. For detailed guidance from the CBP regarding prior disclosures, see What Every Member of the Trade Community Should Know: Prior Disclosure Guide.