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»Issue 8, Volume 07 www.scarbrough-intl.com » August 2007 |
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SCARBROUGH SERVICES
As a customer of Scarbrough International, Ltd. there are a number of things that you need to know regarding Customs bonds. If you are importing merchandise into the United States you must post a bond to ensure that all duties, taxes, and fees owed to the federal government will be paid. If you use a Customs Broker (such as Scarbrough) to clear your goods through Customs, the broker’s bond may be used to secure your transaction. Otherwise, there are two types of bonds that you can obtain: continuous and single-entry. The type of bond you elect to obtain ultimately depends on how often you import into the United States. Customs bonds can be acquired through a surety licensed by the Treasury department. If you only import on occasion, it is recommended that you use a single-entry bond. However, if you import frequently and through various ports of entry, the continuous bond is beneficial and economically the better choice. Importers obtain a single-entry bond for a single shipment. It covers only the entry or transaction for which it was written. Single-entry bond amounts are set by the port director who accepts the bond. The bond amount for a single-entry bond generally is not less than the total entered value plus all duties, taxes, and fees. If the merchandise is subject to other federal agency requirements or qualifies as restricted merchandise, the bond amount set is not less than three times the total entered value of the merchandise. The minimum amount for a single-entry bond is $100. To do business with Customs using a single-entry bond, you must apply for permission. The person must file a written bond application which may be in the form of a letter. The application should identify the value and nature of the merchandise involved in the transaction to be secured. When the proper bond in a sufficient amount is filed with the entry, or when the entry summary is filed at the time of entry, an application will not be required. A continuous bond is normally obtained by importers who have a large number of entries and/or imports through several ports of entry during a given year. They are also acquired by international carriers who frequently arrive and depart the Customs and Border Protection (CBP) territory and by custodians of merchandise who do business with CBP on a regular basis. A continuous bond has a term of one year and is automatically renewed each year. A continuous bond is valid until it is terminated by the surety or the principal. All continuous bond amounts are set by the Revenue Division of the National Finance Center. (Monetary guidelines for setting bond amounts can be found on the CBP website.) The minimum bond amount for continuous bonds is generally $50,000. For importers, the minimum continuous bond amount is $50,000 or 10% of the total taxes and fees paid in the previous 12-month period, whichever is greater. If you haven’t previously paid duty then use the amount of duties and taxes you expect to pay in the current year. Be sure to note that all bond amounts will be rounded up to the next whole dollar amount in multiples of $1,000. Just the same as a single-entry bond, to do business with Customs using a continuous bond, you must also apply for permission. The application package should be submitted to the entry office at the port through which your goods are imported or where the majority of your goods are imported. The application package should include the bond (CBP 301) issued by the surety, a letter on company letterhead stating the type of bond you are requesting, description of merchandise being imported (if applicable), amount of duties and taxes paid to Customs and Border Protection the preceding year (if you have not paid duty previously, then the amount of duties and taxes you expect to pay in the current year), and a CBP 5106 if your address or telephone number has changed from a previous application. Only one continuous bond for a particular activity will be authorized for each principal. The port director will determine whether the bond is in proper form and provides adequate security for the transaction(s). There are a number of different types of Customs bonds used for various activities. The most common type is an Activity 1 bond which is used for entries for immediate delivery. Activity 1a bonds are used for drawback payment refunds. Activity 2 bonds are associated with the custody of bonded merchandise. And for clearance or entry of vessels or aircraft arriving from outside of the United States an Activity 3 bond is sufficient. A current problem that has been identified by the Revenue Division Bond Team is the continued use of insufficient continuous bonds. To deter principals and brokers from using these bonds, the Bond Team may take one or more of the following actions: Other continuous bonds which the principal is using in combination with their own bond will be re-evaluated and may be rendered insufficient. The Revenue Division, in conjunction with the Ports of Entry, may input cargo criteria to preclude immediate release of the principal’s goods. As a last resort, the importer record may be voided. More information on single-entry and continuous bonds can be obtained through the U.S. Customs and Border Protection website at: www.cbp.gov or in the CBP Code of Federal Regulations at title 19 part 113. For more information on Roanoke Trade you can visit their website at: www.roanoketrade.com. -- Ryan Flickinger, CHB Customer Service Representative |
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