What Is Prior Disclosure?

When an individual or company is importing goods into the United States, they are required to operate within the confines of customs law. If they fail to do so, they could be subject to civil–and sometimes even criminal–penalties. Indeed, a review of sections of code such as 19 USC 1592 highlight how introducing documents and materials related to the import of goods that are false can carry penalties reaching into the thousands or millions of dollars.

That being said, there is a safe harbor in place for those who make errors in merchandise valuation or classification: prior disclosure.

What Is Prior Disclosure?

As found in 19 CFR 162.74 – Prior Disclosure, a prior disclosure is made when a person who has committed an error involving the entry of merchandise into the U.S. discloses the error to Customs and Border Protection.  In order for a prior disclosure to be valid, the following criteria must be satisfied:

  • The disclosure must be made either orally or in writing; and
  • The disclosure includes the payment of all actual duties, taxes, fees, or/and loss of revenue owed; and
  • The disclosure must be made before the commencement of an investigation into the violation.

Of course, the prior disclosure should also contain details about the goods involved, the error that was made, and provide an explanation for how/why false statements were made.

What Happens If I File a Prior Disclosure?

If an importer discovers that an error was made that would be considered a potential violation of 19 USC 1592, in order to be protected from penalties which may be assessed under 19 USC 1592,  a prior disclosure can be filed with Customs and Border Protection.  If the disclosure is considered valid and accepted by Customs and Border Protection, the importer can be protected from any penalties that would have been assessed.   

However, if a prior disclosure is made in accordance with the criteria listed above, the party will not be subject to a penalty greater than:

  • Interest due on the loss of revenue if considered negligence or gross negligence.
  • One time the loss of revenue to the government of 10 percent of the dutiful value if the violation did not affect the assessment of duties in cases of fraud.

It is important to note that a prior disclosure is an admission by the importer that there was a violation of 19 USC 1592.  As such, prior disclosures should be handled by an attorney knowledgeable in Customs laws and regulations.

Protect Yourself When Importing Goods to the United States

If you are importing goods to the United States and discover a potential violation of 19 USC 1592, consideration should be given to filing a prior disclosure in order to be protected from potential penalties.  At the law offices of Paula M. Connelly, our experienced customs lawyer can help you to avoid making errors in the first place, and take swift action if a mistake has been made.

Importing goods to the United States without the assistance of a knowledgeable customs lawyer is never advised. To schedule a consultation with the offices of Paula M. Connelly  today and learn more about how to avoid potential problems or violations of 19 USC 1592 and corresponding penalties, contact our law office by phone or online.

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The information contained in this Website is provided for informational purposes only, and should not be construed as legal advice on any subject matter.

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