I originally wrote this blog back in 2013 and it’s as important now as it was then. The landscape has changed a little, with NAFTA now front and center, but good trade compliance is still good business!
When your organization is faced with compliance issues that never seem to go away, an objective review by a third party may allow your company to focus on the aspects of the business that you do best. Importers and exporters are held accountable for compliance with Customs requirements, and must use “reasonable care” in their international trade processes.
What does this mean, and how do you know when it’s time to engage a compliance expert?
The circumstances surrounding every transaction are unique. As such, the details of using reasonable care for each instance is also unique.
Consequently, there is not a foolproof checklist for establishing reasonable care. Looking specifically at valuation, Customs is interested to see the following:
- Do you know, or have you established, reliable procedures to know the price actually paid or payable for your merchandise?
- Do you know the terms of sale (whether there will be rebates, tie-ins, indirect costs, additional payments)?
- Do you know whether assists were provided, commissions, or royalties paid?
- Are amounts actual or estimated?
- Are you and the supplier related parties?
An importer’s responsibility for using reasonable care is not specific to valuation. It encompasses all import processes with different considerations for each.
If the following sound familiar, it may be time to engage with a compliance expert:
- Consistent delays in Customs clearance
- Document “fire drills”
- Insufficient recordkeeping to display “reasonable care” for Customs
- Inability to hire permanent, qualified compliance staffing
- Consistent overpayment or underpayment of duties
- Notification of a pending Customs Audit
- Multiple requests for information or Notices of Action from Customs (CF28, CF29)
- Assessment of Customs fines and penalties
With fines that can reach 80% of the value of the goods, having an effective compliance program is a must. Beyond mitigating risk, a skilled compliance expert can help you to achieve significant duty savings for future as well as past transactions and is a scalable cost without adding headcount.
Most importantly, working with a compliance expert allows your organization to focus on what you do best- your core competencies