As discussed in the post on Transportfolio, everyone knows the chorus of “American Pie.” Each member of your organization only needs to know the “chorus” of Customs compliance. It’s simpler than teaching everyone about the intricacies involved in compliance, and it still helps you become more compliant in the long run.
The Chorus and How to Teach It
US Customs and Border Protection (CBP) lists nine common mistakes that make up the majority of the infractions they find during Focused Assessments (FA) (see “The 9 Deadly Sins of Customs-Related Mistakes” for more details). Processes to fix or prevent these errors make up the general compliance concepts that your employees should know. Below are ways to help prevent your employees from making mistakes in some of these nine areas:
Additions and Deletions: Teach your employees on the warehouse floor to compare invoices to actual received goods. If they don’t match—due to damage, or vendor mistake—your employees should contact you, and you should contact your broker to file a post entry adjustment as soon as possible. Ensure employees understand not only when to call, but why it’s important.
Anti-Dumping/Countervailing: Work with your broker and watch pending cases in your industry to learn about commodities or industries affected. Train your buyers about anti-dumping. If they find a great deal on a product that has a 200 percent dumping, it’s not such a great deal.
Record Keeping: You are required to keep data for five years, don’t keep it longer than that. The CBP can audit you for whatever data you have available. That means if there’s 10 years of data, they will audit all 10 years, which leaves you open to censure for past mistakes. Communicate to your employees the importance of properly disposing documents older than five years.
The Lyrics and Where to Find Them
Like the IRS, the CBP looks at statistics, oftentimes the auditors are even accountants. They focus on numerical data, and search for anomalies in your facts, figures, and documents. Auditors will hold you accountable to a statistical standard. You should be able to answer questions down to the penny about how much you imported in the previous year, not to mention provide documentation showing that same information. In order to help ensure your pennies add up, for only $250.00, the CBP offers Importer Trade Activity (ITRAC) data. Your ITRAC contains five years’ worth of company-specific import data. All of the answers to the test are put on a disc for you. You just have to make sure your answers match theirs. How do you do that?
Analyze ITRAC Data: Use a software solution that provides a visual representation of your ITRAC data, making it easy to navigate and understand.
Perform Internal Audits: Utilize your broker to help perform audits before an official visit.
Develop new or better processes: Based on internal audits, update processes to avoid mistakes and ensure the integrity of your data.
File a Prior Disclosure: If mistakes are uncovered internally, a prior disclosure can protect your company from fines the next time an audit occurs.
Read the FA Handbook: Read it cover to cover. It outlines exactly what auditors will look for and lists all documents you should have on hand for an audit.
These are just a few steps to get you started on a path to better Customs compliance; what others would you recommend from your own personal experience? Be proactive, don’t let the day you receive a phone call from the CBP become the day the music died.
Pete Mento is Director, Global Customs and Trade Policy, at C.H. Robinson. He is a Licensed Customs House Broker and brings industry recognized Foreign Relations Expertise. Pete is an accomplished policy academic who has written many articles and work papers on Trade Theory and Trade Practices. He is especially well versed in matters of import compliance, customs valuation, duty minimization, international finance, and defense industry compliance, free trade as a force for the elimination of poverty and cross border free trade agreements. Pete received his Masters Degree in Government (Trade Theory Focused) from Harvard University and his undergraduate work at Maine Maritime Academy, where he served five consecutive terms as a member of the advisory board.
The 5 year rule for record keeping is a ” rule of thumb”. If you are involved with a number of other programs , such as AD/CV or duty drawback, it might be necessary to keep longer. Be sure you know and understand the regulations for each.