CBP Eliminates Bond Rider Requirement for Importers Participating in ACE Monthly Statement Payment Process, Etc.

CBP Determines Bond Rider is Not Necessary for Importer Participants

CBP states that it is eliminating the bond rider requirement in order to open participation in the Periodic Monthly Statement test to the widest number of importers.

In addition, CBP has determined that the bond rider is not necessary, inasmuch as the terms and conditions of the basic importation bond under 19 CFR 113.62 require the bond obligors to deposit, in the time period prescribed by law or regulation, any duties, taxes, and charges imposed, or estimated to be due, at the time of merchandise release or withdrawal.

As the bond rider did alert the surety that the bond principal is participating in the Periodic Monthly Statement test, CBP states it agrees to notify sureties, electronically, of a bond principal's participation in the test.

CBP Policies for Bond Principals Who Fail to Pay Estimated Duties/Fees

CBP's general notice provides that nonpayment or untimely payment of estimated duties and fees may result in action by CBP to impose sanctions on the delinquent importer of record or to allow the surety to terminate its basic importation bond. CBP has provided the following guidance on how it will handle instances of Periodic Monthly Statement test participants failing to pay, or failing to timely pay, estimated duties and fees:

Bond principals whose payments are late by more than 2 business days must file entry summary documentation with estimated duties and fees. Any bond principal who is late with an estimated monthly statement estimated duty payment by more than 2 business days will be notified by CBP, either electronically or by paper notification, that immediately it shall be required to file entry summary documentation with estimated duties and fees attached before its merchandise may be released from any CBP port. The surety on the affected bond will also be notified. The bond principal will only be released from such a requirement upon full payment of any unpaid estimated duties and fees that have come due under the Periodic Monthly Statement test.

Denial of payment privileges for those with repeatedly delinquent payments. During the test, CBP will retain the right to deny Periodic Monthly Statement payment privileges to any importer that is repeatedly delinquent in the payment of estimated duties and fees due.

CBP Policies for Sureties Wishing to Terminate Bonds of Participants

CBP's general notice provides that if a bond principal is a participant in the Periodic Monthly Statement test, sureties will now be allowed, under certain conditions, to terminate bonds as follows:

Sureties may terminate bonds with 3 business days notice (instead of 30 days notice). According to CBP, for purposes of the test, the provisions of 19 CFR part 113 relating to termination of bonds will be suspended, in certain situations, insofar as sureties will be permitted to terminate bonds with 3 business days notice to the bond principal and CBP. 19 CFR 113.27(b) generally requires a 30-day notice (with exceptions) for surety termination of a bond. Sureties may now terminate bonds with 3 business days notice when termination by the surety occurs because the surety does not accept the risk relating to participation by the bond principal in the Periodic Monthly Statement test.

Termination of bonds due to bond principals failure to perform obligations. Sureties may also terminate bonds with 3 business days notice when termination is a result of the failure of the bond principal to perform obligations arising as a result of participation in the test; however, a termination under these circumstances can only take place after the surety has satisfied its obligations which have arisen as a result of the principal's failure to perform.

New surety must be obtained or participant will be suspended. The importer whose bond is terminated by a surety will be suspended from participation in the test unless a new surety is obtained.

Instructions for sureties notifying CBP of termination. Sureties' notification of termination to CBP is to be provided to: The Revenue Division, Office of Finance, 6650 Telecom Dr., Suite 100, Attn: Bond Team, Indianapolis, Indiana 46278.

Notice of termination to CBP must be in writing and must be delivered by overnight mail, other express delivery service, or fax. Notice of termination to the bond principal must be in writing and must be delivered by overnight mail or other express delivery service. Any notice of termination provided to CBP must include a declaration that the bond principal has been notified of termination.

(Prior to the issuance of this general notice, CBP had explained that Customs brokers that become ACE broker accounts cannot participate in Periodic Monthly Statement for an importer that is not itself an ACE importer account authorized for Periodic Monthly Statement (e.g. has a bond rider). CBP had further stated that Customs brokers can only use Periodic Monthly Statement for an importer that is not an ACE importer account authorized for periodic payment if the customs broker is the ACE importer account (with the bond rider) for the entries in question.

CBP sources now explain that no bond riders will be required for any test participants (i.e. importers or Customs brokers acting as an importer).)

(See ITT's Online Archives or 08/08/05 news, 05080805, for BP summary of an August 2005 CBP general notice announcing certain changes to the Periodic Monthly Statement Test.)

CBP Contact - Robert.B.Hamilton@dhs.gov

CBP General Notice (FR Pub 09/22/05) available at http://a257.g.akamaitech.net/7/257/2422/01jan20051800/edocket.access.gpo.gov/2005/pdf/05-18912.pdf

CBP Press Release (dated 09/22/05) available athttp://www.cbp.gov/xp/cgov/newsroom/press_releases/09212005_2.xml