U.S. Import Compliance: Understanding CBP Form 28 and Form 29
Companies importing goods into the United States can sometimes find themselves facing inquiries from U.S. Customs and Border Protection ("CBP"). These inquiries typically come in the form of a CBP Form 28 – Request for Information or a CBP Form 29 – Notice of Action, which are crucial aspects of U.S. import compliance
These forms are not mere formalities; they are critical tools used by CBP to ensure that imported goods comply with U.S. trade regulations. Failing to respond appropriately can lead to delays, penalties, and even the risk of an investigation into past transactions. Therefore, understanding the purpose of these forms and knowing how to respond effectively is crucial for any company importing goods into the United States.
What is CBP Form 28 – Request for Information?
CBP Form 28 is a tool routinely used by CBP to request more information from importers about their goods. This form is typically issued when CBP wants to verify:
- Proper Classification: Are the imported goods accurately classified under the Harmonized Tariff Schedule of the United States (HTSUS)?
- Accurate Valuation: Is the declared value of the goods accurate and consistent with CBP's valuation rules?
- Compliance with U.S. Import Requirements: Do the goods meet all U.S. import requirements, including labeling, country of origin marking, and other regulatory standards?
Receiving a CBP Form 28 is often a sign that CBP is scrutinizing the accuracy of the import documentation as part of its U.S. import compliance checks. Importers are typically given 30 days to respond, but extensions can sometimes be requested if more time is needed to gather the necessary information. However, failure to respond adequately or on time can lead to increased scrutiny, delays, or even penalties.
For example, a CBP Form 28 might be issued if an importer declares a product as 'plastic toys' with a low value, and CBP suspects the goods are actually higher-value collectibles or made of a different material. Or, if the declared country of origin is 'Made in Vietnam,' but CBP has intelligence suggesting the goods originated in China, a Form 28 may be sent to request supporting documentation for the entry declaration.
What is CBP Form 29 – Notice of Action?
CBP Form 29 is more serious than Form 28, as it involves either:
- Proposed Action: CBP notifies the importer of an intended action, such as reclassifying the goods under a different tariff code, resulting in a higher duty rate or other regulatory consequences.
- Action Already Taken: CBP informs the importer of an action that has already been carried out, such as assessing additional duties or liquidating an entry.
If the Notice of Action is for a proposed action, the importer typically has 20 days to respond, providing evidence or arguments as to why the proposed action should not be taken. If the action has already been taken by CBP, the importer's recourse is usually limited to filing a protest within 180 days of liquidation.
A CBP Form 29 can be a red flag indicating that CBP is closely scrutinizing the importer's transactions for U.S. import compliance issues and has already made a decision regarding those transactions. It may also signal a potential penalty investigation, especially if the issue involves inaccurate valuation, false statements, or other compliance violations.
For instance, a CBP Form 29 might be issued if CBP reclassifies an imported textile from a low-duty category to a high-duty category based on their own lab analysis, resulting in a significant increase in duties owed. Or, if an importer repeatedly undervalues goods from a specific supplier, CBP could issue a Form 29 to liquidate past entries at a higher, adjusted value, demanding payment of the difference.
Why You May Need Information from Your Overseas Supplier
Even if you, as an importer, believe you have a straightforward response to a CBP inquiry or a valid basis to challenge a proposed action, you may still need detailed information from your overseas product supplier. This can include:
- Detailed Product Descriptions: Including the material composition, manufacturing process, and end-use of the product.
- Origin Documentation: Proof of the product's country of origin, including supplier affidavits or certificates of origin, or production-related supporting documents.
- Cost and Pricing Information: Including itemized cost breakdowns for raw materials, labor, and other expenses that impact the valuation of the goods.
Obtaining this information from overseas suppliers can be challenging, especially if the supplier is unfamiliar with U.S. import regulations. However, it is crucial for the importer to provide accurate and complete information to CBP. Additionally, importers must be cautious about the information they provide, as inaccurate or incomplete responses can trigger more questions from CBP and could inadvertently provide CBP with grounds for penalties.
The Importance of Anticipating and Preparing for Customs Inquiries
Responding to a CBP Form 28 or Form 29 within a short timeframe is no small task. However, companies can ease the burden and improve their chances of a favorable outcome by anticipating potential customs issues and implementing proactive compliance measures that are coordinated with the suppliers. This includes:
- Establishing Robust Import Procedures and Controls: To ensure accurate classification, valuation, and origin declarations.
- Maintaining Detailed and Accurate Records: Including invoices, packing lists, bills of lading, and correspondence with suppliers.
- Training and Educating Staff: To understand U.S. import requirements and recognize potential compliance issues.
Proactive preparation not only facilitates faster and more accurate responses to CBP inquiries but also demonstrates a good-faith effort to comply with U.S. import laws, potentially reducing the risk of penalties.
The Legal Responsibility of Importers: Exercising "Reasonable Care"
A common misconception among importers is that they do not need to be exact on their commercial invoice or other import documentation. However, Under U.S. law, reasonable care for importers is a legal requirement for U.S. import compliance when bringing goods into the country:
- Provide a complete product description that accurately identifies the imported goods.
- Declare the correct country of origin and ensure proper marking and labeling.
- Accurately report the value of the goods in compliance with CBP's valuation rules.
Failing to exercise reasonable care can lead to delays in the release of goods, increased scrutiny from CBP, audits, and potentially significant penalties. These penalties can range from substantial monetary fines, including multiple times the value of the imported goods, to the seizure and forfeiture of those goods. In severe cases involving intentional fraud or repeated violations, importers may even face criminal charges.
The Customs Modernization Act and the Shift to Importer Responsibility
The import compliance burden shifted to U.S. importers in 1994 when Congress passed the Customs Modernization Act or "Mod Act" as part of the legislative package that included the North American Free Trade Agreement ("NAFTA"). CBP no longer inspects and reviews every import entry that is declared. Under the Mod Act, importers are legally responsible for ensuring the accuracy and completeness of their import documentation, including:
- Customs documentation for entry
- Merchandise description for tariff classification
- Valuation consistent with CBP valuation rules
- Country of origin verification and labeling
- Free trade agreement requirements
CBP provides a Reasonable Care Checklist to guide importers in fulfilling their responsibilities. This checklist is not a rigid standard, but a set of questions designed to help importers develop their own internal compliance framework. Importers have flexibility in how they meet their reasonable care obligations, depending on their specific transactions.
Practical Tips for Managing Reasonable Care Responsibilities
To effectively manage reasonable care responsibilities and minimize compliance risks, importers should:
- Familiarize Themselves with CBP's Reasonable Care Checklist: Answering the questions posed by CBP helps importers identify compliance gaps and formulate necessary internal procedures.
- Develop an Internal Compliance Program: Establishing clear policies, procedures, and controls for import compliance.
- Maintain Open Communication with Overseas Suppliers: Ensuring suppliers provide accurate product descriptions, origin documentation, and cost breakdowns.
- Conduct Regular Compliance Audits: To identify potential issues before they attract CBP's attention.
- Seek Professional Guidance When Necessary: Consulting with experienced customs compliance professionals or legal counsel.
Conclusion
Responding to a CBP Form 28 – Request for Information or CBP Form 29 – Notice of Action is not merely an administrative task—it's a legal obligation with potentially serious consequences. By understanding the purpose of these forms and preparing in advance, importers can not only meet their compliance obligations but also protect their supply chains from costly delays, penalties, and audits.
The key to minimizing compliance risks lies in exercising reasonable care through accurate documentation, proactive communication with suppliers, and robust internal procedures. Importers who take a proactive approach to compliance are better positioned to respond to CBP inquiries efficiently and effectively.
U.S. Import Compliance: A Guide To CBP Form 28 And Form 29
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
