April Webcast Q&A Wrap-up

Presented by Denise Guzialek

Program Manager--Compliance Services

Copper Hill Incorporated

 

Q: I would like to start flagging my entries to file value recon. How do I go about setting this up?

A:  The first step is to contact your surety company to add a recon rider to your existing bond. Once this is complete, contact your broker to begin the application process to begin flagging your entries for value recon. Once your entries are flagged, you have 21 months to reconcile. You can work with your broker who can file recon entries with Customs with the corrected values.

 

Q: I have tooling that has depreciated over the last 25 years and has $0.00 book value. Can I value this on my commercial invoice as $0.00?

A:  Yes, under GAAP, the value of merchandise can depreciate to a $0.00 book value.

 

Q: I received a CF 28 on a classification issue that has now led to me needing to file a Prior Disclosure on classification. I believe I also have valuation issues but I am not certain how many and the depth of the issue. Should I include valuation in my Prior Disclosure?

A:  If you believe you have valuation issues that need to be corrected with Customs, I would suggest doing a sample audit-- the size of the audit would depend upon how much you import. This may typically be 10-30%. This sample audit should yield any potential errors you may have. Review of the audit findings would help you make the determination if a disclosure for valuation is also required. Anytime you have questionable data, it is best to disclose all issues to Customs. This gives you protection under the Prior Disclosure to avoid any penalties.

Q: ­Value declared on entry is the amount listed on the commercial invoice. Once the product is received, we noticed damages and received a credit from the supplier. Are we required to make a correction to value declared on entry? ­

A:  Yes, a correction would be required and would work in your favor for a duty refund if duty was paid on the merchandise.

Q: ­I am new person to Customs processes. What is the best way to start learning valuation?  Any books or trainings you could recommend?

A:  I would recommend starting with the review of Customs Regulations and the below links:

https://www.cbp.gov/sites/default/files/documents/icp001r2_3.pdf

https://www.cbp.gov/sites/default/files/assets/documents/2016-Jul/Valuation%20Encyclopedia%20Dec%202015%20final.pdf

You can also attend training seminars offered by the following organizations:

  • ICPA
  • AIAG
  • AAEI

Q: ­What are Assists? In addition, how is it reported?

A:  Assists are defined (19 U.S.C. 1401a(h)) as:

  • Materials, components, parts and similar items incorporated in the imported merchandise.
  • Tools, dies, molds, and similar items used in the production of the imported merchandise.
  • Merchandise consumed in the production of the imported merchandise.
  • Engineering, development, artwork, design work, plans, and sketches that are undertaken elsewhere than in the United States and are necessary for the production of the imported merchandise. ­

 To be treated as an "assist" the article or design must be:

  • Supplied directly or indirectly by the buyer
  • Provided free of charge or at reduced cost, used in connection with the production or sale for export to the United States of the merchandise

 A:  How is an assist reported?

The total value may be reported as:

  • The first shipment, if the imported wishes to pay duty on the entire value at once
  • The number of units produced up to the time of the first shipment or
  • The entire anticipated production

 Q: ­You are very positive on RECON: Are there any import program scenarios that you think RECON would not be the preferred method and PSC or PD would be more appropriate? ­

A:  Recon can be filed if you have large volumes of entries to correct and there are entries that are more current. If you need to make changes to many of your entries, then recon is the best, most efficient route. One must first already be flagging for value recon though to file. If you only have a small volume of entries to correct then filing, PSCs would be most efficient. Prior Disclosure is the best method for correcting past errors. Should you discover you have a large volume of errors to correct and, may be outside of the period allowed for filing PSCs, then a Prior Disclosure may be your best option.

 Q: ­I believe you have to be on Reconciliation to file a recon entry, so if you find an error and you are not on Recon then you cannot use recon to fix it, correct? ­

A:  That is correct. You must first flag your entries for value recon to be eligible to file a correction through the value recon process.

 Q: ­If company A has a subsidiary B in another country to where company An export parts for machines sold by company B.­ Do we need to declare to CBP a transfer of technology for the payment of duties from a subsidiary in another country if the technology was transferred by email?

A:  Yes, the value of that transfer of technology needs to be declared. I can further assist if you would like to send more details.  Please feel free to reach out to me at This email address is being protected from spambots. You need JavaScript enabled to view it.

 Q: ­When recon was not performed, how many years back should we go with the prior disclosure? ­

A:  You are required to go back five years from the date Customs approved your desire to file a Prior Disclosure. You must first submit a letter to Customs asking for approval to file a Prior Disclosure. Once approved, you must review and file a PD for the previous five years.

 Q: ­Mold Cost - Follow-Up Question: If the mold depreciates over time, can you use the depreciated amount? ­Or does the mold have a different life expectancy? ­

A:  The mold would not have a different life expectancy. You may declare the depreciated amount.