ISF Enforcement

Recap A Surety

Perspective

Presented by:Jason Palumbo

Account ExecutiveSeptember 18, 2013

Liquidated Damages

• LD enforcement phase officially began July 9

– Limited LD activity to date

– Major concern to importers, brokers, & sureties is poor compliance rate

• CBP policy is to withhold release until ISF filing

– I.e., to get out of “ISF Jail” an ISF must be filed (late)

Some Disturbing Numbers

• As of September 6, “compliance rate” was just over 90%

– Eight weeks earlier, it was said to be around 80%

• These CBP numbers measure only filing/non-filing of ISFs on shipments requiring them:

– Late file percentage unknown

“Timely” = vessel departure minus 24 hours

– Faulty data percentage unknown

Temporary Enforcement Phase

• Until mid-2014 or later, HQ is to approve all LD claims prior to mailing to importer & surety

– CSMS giving 30 days notice to be transmitted prior to end of HQ review requirement

• Exact form of next phase unclear

• Eventually, issuance of LD for late ISFs to become “automatic” (similar to current process on late filing of 7501s)

What to Expect if No ISF Filed

• In general, ISF holds

– No release until an ISF filed +

– NII or intensive exam +

– Possible LD (since ISF filing will be late)

• Expectations similar if ISF is filed just before arrival

What Not to Expect

• Uniform port-to-port handling

– Due to variable volumes/resources, CBP HQ will not dictate “operations policy” to ports

– This will affect:

LD issuance

Frequency of holds

Frequency of NIIs, intensive exams

Release of consolidated containers – partial compliance

Don’t Expect…

• No-load messages

– CBP is clearly viewing this as a rare step to be taken only when “national security threat” is foreseen

• General increase to Activity Code 1 continuous bond amounts

– But selective increases for specific non-compliant importers is a possibility consistent with current Revenue Division practice

Also Deemed Rare…

• Long case issuance delays/large LD backlogs

– The “six year distraction”

All bond originated liabilities are subject to 28 U.S.C. § 2415

– ISF: Statute essentially starts at due date

– Other LD: Essentially starts at 5955A date

– Supplemental duties: Statute essentially runs from liquidation

– HQ wants LD assessed timely (within 30 – 60 days)

Ready to File but Late – What to Do?

• Sureties will probably require collateral to do an ISF STB, but there are other possibilities

• Activity Code 1 (also 2, 3, or 4) continuous bond on file as of ISF due date

• ISF Submission Type 5 (late ISF-10 with no bond)/Type 6 (late ISF-5 with no bond)

• Worst thing to do – not file the ISF

Lingering Concerns

• 5955A inconsistencies

– Delays of up to two weeks in mailing

– Inadequate information

To date, notices have not shown ISF numbers or filer IDs

• Data inadequacies (ASI)

– No ISF number

– No B/L number

– No Filer ID

Mitigation…The Big Question Mark

• July 2009 Mitigation Guidelines specify:

– Minimum assessment (after mitigation) for first violation - $1,000

– Minimum for any subsequent violation - $2,500

– Additional relief available if importer C-TPAT certified

• Interim final rule (November 2008): “…mitigation will be the exception and not the rule….”

Questions??