Increased Enforcement Activities “How to Prepare & Respond” WMTA Breakfast Wednesday, May 20, 2009

What Does Customs Expect? Things To Look Out For  Basic Entry Review  Identifying Discrepancies Maintaining Audit Trail  Verification Checklist  Additional Back-up Information  Filing & Recordkeeping Protocol Assessments  Internal  Quarterly  Annual What We’ll Cover Today

Recommended Reading See Customs Publication Titled: “What Every Member of the Trade Community Should Know About: Reasonable Care (a checklist for compliance)” February 2004

What Does Customs Expect? Be informed & compliant on issues relating to the following core areas:  Classification  Valuation  Special Programs  Origin  Recordkeeping Review every single transaction?  Yes Perform periodic audits of your import operations?  Internal  Third party Maintain audit trail

Things To Look Out For Basic Entry Review  Ensure that all required documents are present: Broker Invoice CF-7501 (Entry Summary) Commercial Invoice Special Program Certificates (NAFTA, etc.) Special Program Declarations (e.g. Assembly Declaration, Textile Declaration, etc.)  HTSUS Classifications How do you classify? Can you legally defend your classifications?  Entered Values Cost Construction & Reporting  Duties Paid  Special Program Indicators (i.e. MX for NAFTA, 9802 & 9801, etc.)

Identifying Discrepancies Material vs. Non-Material Errors  Material Errors Include: Value Adjustments (greater than $20.00) Origin Changes HTSUS Code Changes Special Claim Changes Quantity Changes Incorrect MID  Non-Material Errors Include: Primarily Value Adjustments  Resulting in little or no duty difference (e.g. < $20.00) Quantity and Weight Adjustments  If they do not affect duty and the difference is less than 5%)

Audit Trail Import Entry Verification Checklist  Create a simple form in Excel or Word that contains: Entry Number Invoice Number Entry Date Broker Reference Number (as applicable) Total Duty Paid Country of Origin Final Entry Package Documents Received (from broker) Verify Import Data Elements for accuracy / compliance:  Classification  Special Claims  Quantity  Value  Etc. (match commercial invoice to CF-7501)

Additional Backup Information How was the classification determined? If a special program was claimed is all of the support documentation available? Are the values declared accurate? Are all the required declarations attached and properly filled out? Do I have all my required certificates of origin?

Filing & Recordkeeping Protocol Import Entry Verification Checklist Broker Invoice CF-7501 All Commercial Invoices All Special Program Declarations

Reviews & Assessments Ongoing Reviews  Internal (“DIY”) Quarterly Assessments (3 rd Party)  Review of import entry documentation packages; specifically: Entries with NAFTA claims Entries with 9801/9802 claim Entries with no Special Program claims (general entries) Annual Assessments (3 rd Party)  Validate all import compliance procedures for accuracy including: Customs Compliance Manual Supporting Documents (e.g., checklists, guidelines, etc.) Flow Diagrams

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