It goes without saying that Americans import a lot of stuff. The U.S. is the largest goods importer in the world, importing $2.5 trillion worth of goods in 2019. For this reason, it’s important for the U.S. Customs and Border Protection (CBP) to have processes in place to ensure importers are compliant. The CBP regularly performs customs audits in an effort to uphold regulations and ensure the correct revenue is being collected.
Regardless of which US customs broker you use, a customs audit can happen to anyone. If you are audited, it can result in recommendations, duty adjustments going back four years, and financial penalties. Customs audits can be both time-consuming and financially burdensome if importers are not adequately prepared.
So, considering a customs audit can be somewhat inevitable, here is how importers can get prepared for a customs audit:
Importers should work with a US customs broker to maintain accurate documentation
The foundation of a successful audit preparation strategy lies in maintaining accurate and complete documentation. Importers should keep records of all transactions, including invoices, bills of lading, purchase orders, and shipping documents. Ensure your records are organized, easily accessible, and properly indexed.
Working with a US customs broker is the best way to get prepared. Not only will you have all necessary documentation completed, but it will also be easily accessible in the case of an audit.
Remember that classification and valuation is key
Correctly classifying your imported goods under the Harmonized System (HS) codes and accurately valuing them is crucial. Ensure you have a robust system in place for determining the correct classification and valuation methods, as these are often points of contention during audits.
Complying with Trade Agreements is important
If you benefit from preferential trade agreements or duty exemptions, make sure you have the necessary documentation to support your claims. This includes certificates of origin and other relevant trade agreement documents.
Complying with the Importer Security Filing (ISF) is also important!
Compliance with the Importer Security Filing (ISF) requirements is critical. Accurate and timely submission of ISF data is essential to avoid penalties. Maintain records of ISF filings and communications with carriers and customs brokers.
Always make a detailed record of internal processes
Document your internal import processes comprehensively. This includes how you handle customs compliance, recordkeeping, and communication with your US customs brokers. Having clear procedures in place can help demonstrate your commitment to compliance during an audit.
Don’t forget about maintaining an audit trail
Maintain an audit trail that shows how you arrived at your declared values, classifications, and any duty drawback claims. This will help prove the accuracy and legitimacy of your import documentation.
Check with your customs broker to ensure you’re prepared in the case of a customs audit
Your customs broker is a valuable partner in import compliance. Regularly communicate with them to ensure they understand your business and can provide guidance on compliance issues.
Preparing for the customs audit
Once you have a solid foundation of accurate documentation and a clear understanding of the customs audit process, you can take specific steps to prepare for an audit:
Perform a self-audit
Conduct regular self-audits to identify and rectify any compliance issues before they become more significant problems. Self-audits can help you catch errors and discrepancies in your records.
Make sure your team is adequately prepared for the customs audit
Invest in training and education for your team members involved in the import process. Ensuring that your staff is knowledgeable about customs regulations and procedures is key to maintaining compliance.
Use a third-party to complete a mock customs audit
Consider conducting mock audits or engaging third-party auditors to assess your compliance levels. Mock audits can help you identify weaknesses in your processes and documentation.
Engage legal counsel if necessary
In complex cases or if you suspect potential compliance issues, it may be wise to engage legal counsel experienced in customs matters. They can provide valuable guidance and legal representation during the audit process.
Establish open communication with CBP auditors
Maintain open communication with CBP auditors during the audit. Be prepared to provide requested documents promptly and answer their questions truthfully. Cooperation can go a long way in smoothing the audit process.
The bottom line
Preparing for a US Customs audit is an essential aspect of importing goods into the United States. By maintaining accurate documentation, understanding the customs audit process, and taking proactive steps to ensure compliance, importers can reduce the stress and financial burden associated with audits. Remember that compliance is an ongoing commitment, and staying vigilant in your import processes will not only prepare you for audits but also streamline your overall import operations.
Looking to import goods using an experienced US customs broker? Reach out to our team to learn more about our services.