CBP prior disclosure: correcting US import errors before an investigation

What a prior disclosure is

A prior disclosure is made when a person tells a CBP officer, orally or in writing, about the circumstances of a violation of 19 U.S.C. 1592 or 1593a before, or without knowledge of, a formal investigation of that violation, and tenders the actual loss of duties, taxes and fees. An oral disclosure must be confirmed in writing to the Fines, Penalties and Forfeitures Officer within 10 days.

A formal investigation starts on the date CBP records in writing that it had information suggesting a possible violation. Knowledge of an investigation is presumed if, before the disclosure, CBP told the person about the violation, a Special Agent asked about it or requested records, a prepenalty or penalty notice was issued or the goods were seized; the person can try to rebut this.

What the disclosure must contain (162.74(b))

• The class or kind of merchandise involved
• Each entry or drawback claim by number, or by port and approximate dates
• The material false statements, omissions or acts, and how and when they occurred
• The true and accurate information, with a commitment to provide unknown information within 30 days
• A written disclosure is addressed to the Commissioner of CBP, marked "prior disclosure" on the envelope and presented at the port of entry; for several ports, identify all ports concerned

Paying the loss and the effect on penalties

The importer tenders the actual loss of duties, taxes and fees at the time of disclosure or within 30 days after CBP gives its calculation in writing; failing to pay the final amount means the prior disclosure is denied. Where CBP's calculation exceeds $100,000, the party may ask for Headquarters review under conditions set in the rule. Statistical sampling can be used with CBP's approval.

With a valid prior disclosure, the penalty for negligence or gross negligence is limited to interest on the unpaid duties, and for fraud to 100% of the unpaid duties or 10% of the dutiable value if duties were not affected. Without it, penalties can reach two times the lost duties for negligence, four times for gross negligence, and up to the domestic value of the goods for fraud. Violations outside the scope of the disclosure do not get prior disclosure treatment.