CBP Officials Provide 10+2 Update, Discuss Penalties, Report Cards

The following are highlights of their comments as well a their slide presentation:

Acting Commissioner Would Consider Extending Delayed Compliance Period if Circumstances Warrant

While the interim final rule took effect on January 26, 2009, there is a 12 month delayed compliance period from the effective date (January 26, 2010), which the interim final rule authorizes CBP to extend if circumstances warrant.

Acting Commissioner Jayson Ahern stated that if, after the delayed compliance period, people are not ready, but all efforts to come into compliance with the new requirements were made, CBP would strongly consider extending the delayed compliance period.

(Note that in March 2009, Assistant Commissioner Winkowski dismissed the rumor that 10+2 will somehow become modified or be pushed back from full implementation in January 2010. See ITT's Online Archives or 03/24/09 news, 09032405, for BP summary.)

CBP to Soon Use Vessel Departure Date to Assess ISF Timeliness

Another CBP official, Stephen Silvestri, stated that during the period of March 25 - April 15, 2009, 45% of ISFs were considered timely, an increase over past performance.

To be considered timely, CBP is currently comparing the ISF with the bill of lading (BOL) file date. CBP is expected to soon use the vessel departure date to better assess ISF timeliness. Silvestri noted that CBP expects to see the timeliness increase once the comparison date has changed.

Amendments to Filings Count as ISF Transmissions

Silvestri also stated that each amendment to an ISF will be considered an ISF transmission. This means that an ISF filer who transmits an ISF with incorrect information and then files an amendment to that transmission that also contains incorrect information could be subject to $10,000 in liquidated damages.

(According to CBP's 10+2 FAQ², CBP will issue liquidated damages of $5,000 for each ISF transmission that is not timely, complete and/or accurate. Note that in the past, CBP has often provided for significant mitigation of liquidated damages assessments.)

CBP is Working on Penalty Mitigation Guidelines

Silvestri stated that that CBP is working on penalty mitigation guidelines, and that CBP will continue to consider an entity's progress in the implementation of the interim final rule during the delayed enforcement period as a mitigating factor in any enforcement action following the delayed enforcement period.

ISF Report Cards to be Sent Out at End of April, to Be Sent via Email

While CBP has announced that it is ready to send out "performance report cards" (aka performance reports), the scheduled release is not until the end of April 2009. Silvestri stated that report cards were sent to three trusted partners and the feedback was overwhelmingly positive.

The report cards will be routed through the ISF filers, who will be responsible for passing them on to their clients (i.e., ISF importers).

Silvestri also noted that CBP will not be able to send the reports via ABI or AMS; however, the report cards will be automatically generated by an application within the Automated Targeting System (ATS). The report cards will be automatically emailed by CBP's Office of International Trade.

(NCBFAA previously stated that best practices are expected to be published when the report cards are issued.)

Report Cards to Focus on Three Areas

According to CBP, each ISF report card is broken down by filer code and Importer of record (IR) number. Each report card details three specific areas of focus (See CBP's presentation for sample report cards):

Volume. Numbers, status (accepted or rejected) and format.

Rejections.Reasons for the rejections (by error message).

Timeliness.As compared to the first BOL file date (not completely accurate). Amendment and rejected filings are not included.

Over 500,000 ISF-10 Filings Submitted, 87% Accepted without Errors

Silvestri stated that from January 26 - April 16, 2009, CBP had received 554,618 ISF-10 filings, 87% of which were accepted without errors. 8.6% of those filings were rejected with errors and 4.3% were conditionally accepted with warnings. CBP is currently receiving over 60,000 ISF-10 filings per week.

Top 5 Reasons for ISF-10 Filing Rejections

CBP outlined the top five reasons for ISF-10 filing rejections:

Duplicate transmission. The main reason for ISF-10 filings being rejected is duplicate transmissions. This could mean that the ISF filer did not wait long enough for a response from CBP and re-submitted a filing; the ISF filer did not receive a response and re-submitted a filing; the system incorrectly processed the same ISF twice; or a different ISF filer had previously submitted an ISF with the same IR and BOL number. According to CBP's statistics, nearly 15,000 ISF-10 filings were rejected due to duplicate transmissions.

Invalid ISF transaction number.The second largest reason for ISF-10 filings being rejected is an invalid ISF transaction number. Nearly 11,000 ISFs-10 filings were rejected for this reason. CBP notes that this could occur if the ISF transaction number provided in the filing was previously issued to a deleted transaction or a transaction in a different environment (e.g., "Test" vs. "Prod") or the ISF transaction number provided in the filing was previously issued to a different filer. CBP notes that amendments must be done by the original ISF filer.

Invalid HTS number.According to CBP, nearly 6,000 ISF-10 filings were rejected due to an invalid Harmonized Tariff Schedule (HTS) number - the HTS number provided in the filing was not valid at the 6-digit level, according to the commodity table.

Invalid IRS format.Over 3,500 ISF-10 filings were rejected because the entity identifier provided is not a valid IRS number format.

Missing city.Approximately 3,000 ISF-10 filings were rejected because a city was not provided.

¹For shipments other than those consisting entirely of foreign cargo remaining on board (FROB) and shipments intended to be transported in-bond as an immediate exportation (IE) or transportation and exportation (T&E), ten data elements must be provided for each good listed at the six-digit HTS number at the lowest bill of lading level (ISF-10)

²CBP responses to the FAQs are for informational purposes only and are non-binding

(See ITT's Online Archives or 12/23/08 news, 08122310, for the final part of BP's summary on the details of CBP's 10+2 interim final rule, with links to previous parts.

See ITT's Online Archives or 03/10/09 news, 09031015, for the final part of BP's summary on CBP's 10+2 FAQ, with links to previous parts.

See ITT's Online Archives or 04/07/09 news, 09040705, for BP summary of CBP announcing it was ready to send out ISF report cards.)

CBP presentation from NCBFAA conference available via email by sending a request to documents@brokerpower.com