CBP Offers Voluntary Process to Prevent "Gaps" in Continuous Bond Coverage

(When the termination of an existing continuous bond is not synchronized with the approval of the replacement bond, "gaps" in continuous bond coverage can result for parties listed on the bond. Bond filers find it difficult to avoid these "gaps," especially when the replacement bond submission is rejected, but the termination request has been processed.

CBP states that currently, the best solution to this problem is allowing CBP more time to process termination and replacement requests. Additional time allows CBP to review and possibly reject these submissions well before the desired new effective date. Additional time also allows the filer to correct any errors and resubmit those corrections well before the desired new effective date.)

New Process for Bond Termination, Replacement Requests

In response to the problem, CBP's Revenue Division is creating a new process, effective immediately, for the expedition of termination and replacement requests:

Expedited action must be requested by end of month, at least 31 days ahead. The Revenue Division agrees to expedite the review of "terminate and replace" requests received by the end of each month which satisfy one condition - the requests must contain requested termination and new effective dates which are at least 31 days into the future.

For example, the Revenue Division will expedite the initial review of terminate and replace requests received by 11/30/07 as long as the requested termination date and new effective date are 01/01/08 or later.

(The expediting of these terminate and replace requests will happen only once a month. On the first business day of each month, the Revenue Division will segregate all terminate and replace requests which have been received during the previous month and which satisfy the one condition noted above. The Revenue Division agrees to review these "qualifying" terminate and replace requests within 5 business days after they have been segregated.

For example, a continuous bond terminate and replace request is received on 11/28/07. The submission requests a termination date of 01/04/08, and a new effective date of 01/05/08. This submission will be specifically identified by the Revenue Division under this new process on 12/3/07, and it will be reviewed no later than 12/10/07. If rejection is necessary, the rejection notice will be issued no later than 12/17/07.)

Filers to have a minimum 3-4 days to respond to bond rejection without creating a "gap." Under this process, the minimum amount of time that a filer will have to work through any rejection issues before the desired new bond effective date is about two weeks. Note that the Revenue Division may require up to half of this period to review and process the response to the rejection. Still, this new process will allow diligent bond filers a minimum of 3 - 4 business days to respond to a bond rejection without automatically creating a "gap" in continuous bond coverage.

Participation is voluntary. Participation in this process is voluntary. Bond filers may still submit terminate and replace requests at any time. This alternative process is being offered in response to a specific need raised by the trade community.

Requests filed in response to a formal demand are not eligible for new process. Terminate and replace requests filed in response to a formal demand from CBP are not eligible for this process. These bonds must be terminated and replaced pursuant to the conditions specified in the demand letter.

Revenue Division will not expedite submissions in any other way. The Revenue Division does not agree to expedite subject submissions in any other way beyond what is specified above (i.e. the initial review). Referrals to the Reject Team may still take up to five business days before the formal rejection notice is issued. Responses to rejections may still take up to five business days for the Revenue Division to process.

Procedure will not compensate for filers responding slowly to rejection notices. This procedure will not "compensate" for filers who are slow in responding to rejection notices, or who fail to adequately address all the problems identified in the rejection notice.

This new process allows diligent bond filers a reasonable amount of time to respond with corrections without disrupting the continuous bond coverage. However, filers who are not diligent in these areas will still run a considerable risk of "gaps" in continuous bond coverage.

(See ITT's Online Archives or 08/22/07 news, 07082210, fro BP summary announcing that bond riders and termination requests for all continuous bonds are now processed by the Revenue Division.

See ITT's Online Archives or 10/09/07 news, 07100905, for BP summary announcing that approximately 900 continuous bond records did not transfer to ACE as part of Entry Summary, Accounts, and Revenue (ESAR) A1 implementation.)

CBP contact-Casey Horn casey.horn@dhs.gov

CBP notice (dated 11/06/07) available at http://www.cbp.gov/xp/cgov/import/communications_to_trade/pilot_program/news_develop/terminating_replacing_bonds.xml