|In recent discussions with the International Trade Surety Association (ITSA) and Customs Surety Executive Committee (CSEC), CBP stated that they are mandating a significant change to the calculation of final mitigation on liquidated damage claims (LD) when petitions are untimely. Click here to view the source document. CBP believes that the current mitigation guidelines on late petitions have not served to deter or reduce the incidence thereof.
Customs Regulations allow 60 days for filing petitions seeking relief from LD. See 19 C.F.R. § 172.3(b). For many years, CBP has accepted late petitions but has granted less relief than for timely petitions. In accordance with CBP’s Mitigation Guidelines: Fines, Penalties, Forfeitures and Liquidated Damages as amended by T.D. 02-20, late settlements were calculated as follows:
The new calculation is reportedly to be as follows:
This change can result in monumental increases to final mitigated amounts, especially for LD cases (primarily late filing of entry summary) subject to “Option 1 Amounts.” An illustration:
A final version is to be published in the Customs Bulletin (exact date unknown) and the foregoing may be revised, including but not limited to an increase to Option 1 calculations. While CBP has said that such changes are not subject to notice and comment requirements, they have reached out to NCBFAA and AAEI with advance notice of the impending changes. If you are a member of either association, we strongly encourage you to contact them with your feelings on this important subject. NCBFAA member comments should be sent to email@example.com with the Subject line “CBP LD Mitigation Changes.” AAEI’s Customs Committee is handling the issue. AAEI member comments should be sent to firstname.lastname@example.org. Do not comment directly to CBP, only to your association.
Importers and brokers are urged to institute new processes/safeguards to make doubly sure that you petition timely or take prompt advantage of Option 1 Amounts. The price of letting something “fall through the cracks” has just gone up substantially. Also note that the upcoming changes underscore the importance of an importer limiting LD exposure by maintaining a continuous bond in the correct amount rather than multiplying liability through use of STBs.