Keeping Your Records Up-to-Date
Most records required by Customs to be maintained are not needed in order for you to clear your merchandise. You might first become aware that you need them when Customs requests to review them. By that time they may be unavailable. Customs is under no obligation to specifically advise an importer of records it expects to be produced on demand other than publishing general requirements in its regulations and directives. Should you discover, when documents are demanded or during a Customs audit, that your records are insufficient, you will be exposed to merchandise recalls, the loss of claimed (and previously granted) duty exemptions and unexpected and substantial duty assessments.
What We Do
- Advise of what records you must keep, tailored to the nature of your import program.
- Assist you in developing written systematic import procedures and controls to insure the accuracy and defensibility of your Customs declarations.
- Review your import program after receipt of notice of audit and make such “prior disclosures’ as are necessary to avoid penalties.
- Interface with the Customs auditors and guide your personnel on how to respond to the auditors’ questions and documentary requests.
More Details
Importers are required to make, keep, maintain and submit on demand, for five years after the date of any given entry, all records that support what has been declared. What is declared includes classification, valuation, country of origin, and qualification for duty-free treatment if claimed. If such records are not available--they might never have been existed, they might have been disposed of, you might have ceased doing business with the supplier in question and can no longer obtain records the supplier would have—Customs will make every “reasonable” assumption that would support the assessment of additional duties or to deny entry.
Customs selects importers for an audit primarily based on import volume and its prior experience in finding violations as to particular product lines. It begins with what it calls a “Focused Assessment.” It determines whether your company has written procedures to insure the accuracy of your Customs declarations. It seeks documentation to confirm that written procedures are being followed. It encourages an importer to have periodic review of its import controls, both in-house and by outside consultants. It wants to know if your company has a system of determining and reporting any errors.
This documentation review during “Focused Assessment” is relatively extensive and requires a joint effort on the part of ourselves and the importer. Yet it is nothing compared to what happens if Customs auditors find significant fault with your systems, even if at that time it finds no specific violation. In such a case, Customs it will enlarge its review and do a thorough audit of your import transactions and your accounting records. While sometimes unavoidable, the process is lengthy, expensive, and cannot benefit the importer. If the auditors find an undisclosed violation, the matter will be referred for investigation and penalties. This can be avoided as a “prior disclosure (see Seizures and Penalties) can be made even after an audit has commenced.
Contact Us for More Information
You are welcome to call us to review any area of concern. Contact Stephen M. Zelman, Esq., at 1+ 212.245.6100 for a telephone consultation, with no obligation for any fee. E-mail at smz@stevezelman.com.