Ask the Wizard: Required Compliance Tools

Each Friday, the Wizard joins us to share an answer to one of the questions asked during the week. This week we had an excellent question about the publications that CBP requires brokers and importers to maintain.

Question:
Are U.S. importers required by Customs law to have a desktop copy of the U.S. Customs explanatory notes? If not, in a case of a customs audit will customs look to see if you have a copy for the purpose of reasonable care?

When dealing with import compliance, the answers are almost never quite as simple as “yes” and “no.” The CBP Regulations (19 CFR) do not require importers to maintain copies of the Explanatory Notes or other government publications; however, it is important for importers to have access to tools that will help them fulfill their responsibilities and demonstrate reasonable care. Additionally, a CBP audit requires importers to answer questions that indicate what resources are used and how they are used. Ask yourself this question. If CBP asked you to demonstrate how classification of a specific product was determined, how would you explain the process and what documentation would you provide? The Wizard might discuss this in another article if anyone is interested.

The types of tools importers maintain depend on the complexity and volume of transactions. For example, a low volume importer that only imports two products may not need to purchase the Explanatory Notes. However, an importer with hundreds of products and classifications or products identified as difficult to classify is more likely to need the Explanatory Notes, along with the HTSUS, access to binding rulings and other CBP publications. Remember, the importer has the ultimate responsibility for the accuracy for classifications, even if they use a broker. Another issue to consider is how the tools are used. It would be worse for an importer to purchase a copy of the Explanatory Notes, put them up on a shelf, and never use them, than to not have them at all. Consider the volume of imports, complexity of classifications, available resources, procedures and other factors. Don’t forget the other tools that are available.

• Code of Federal Regulations Title 19 (19 CFR)
• Harmonized Tariff Schedule of the U.S (HTSUS)
• Dictionaries and Reference Books
• Internet Access
• Procedures
• Customs Rulings

While it is not mandatory that importers have all of these tools, use of them helps demonstrate reasonable care and compliance. They also make employee's jobs easier, and increase productivity and accuracy.

Do you have a question for the Wizard? Submit your question by clicking on the link in the space for “Ask the Wizard.” See you next Friday!