As a Miami lawyer deeply involved in international trade, I frequently represent companies and individuals importing goods into the U.S. For such importers, it is crucial to understand the severe legal ramifications of import tariff or duty evasion when entering and clearing goods into the U.S. through Customs and Border Protection (“CBP”).
The U.S. government is aggressively cracking down on customs fraud. What might seem like a minor misstep – such as misclassifying goods, undervaluing shipments, or misrepresenting country of origin – can lead to significant civil and criminal penalties.
Common evasion schemes include:
- Misclassification: Declaring goods under a tariff code that attracts a lower duty rate than the actual applicable code.
- Undervaluing goods: Falsifying commercial invoices to show a lower price for imported items, thus reducing the calculated duty. This can involve “double invoicing” or failing to report “assists” (items provided to a manufacturer that reduce production costs).
- False Country of Origin: Falsely declaring the country of origin to benefit from preferential duty rates or avoid anti-dumping and countervailing duties (AD/CVD). This often involves “transshipment,” where goods are routed through a third country to obscure their true origin.
The consequences of evasion are severe and can include:
- Substantial Fines and Civil Penalties: These can range from multiples of the duties owed (e.g., 2x for negligence, 4x for gross negligence) to the domestic value of the merchandise for fraud.
- Criminal Prosecution: Individuals and corporate executives can face imprisonment (up to 5 years for false statements, up to 20 years for customs smuggling), criminal fines up to $250,000 for individuals and $500,000 for organizations, and forfeiture of goods and assets.
- Seizure of Goods: CBP has the authority to seize illegally imported merchandise.
- Loss of Import Privileges: Businesses found to be engaging in fraudulent practices may lose the ability to import.
- Reputational Damage: The negative publicity from enforcement actions, such as agency press releases, can significantly harm a company’s brand and trust.
It’s critical for businesses engaged in international trade to prioritize robust compliance programs and conduct thorough due diligence on their supply chain partners. Even unintentional errors can lead to costly penalties. Intentional violations can result in prison terms.
If you have concerns about your import practices or are facing a CBP inquiry, seeking legal counsel early is paramount. Proactive compliance and experienced legal guidance can help mitigate risks and navigate the complexities of U.S. customs law.
Sincerely yours,
Robert J. Becerra, B.C.S.
Florida Bar Board Certified Expert in
International Law
BECERRA LAW, P.A.
2800 Ponce de Leon Blvd.
Suite 1400
Coral Gables, Florida 33134
Tel: 305-375-0112
Cell: 305-431-5940
E-Mail: [email protected]
www.rjbecerralaw.com
Past-Chair, Florida Bar International
Law Section
Immediate Past-Chair, Florida Bar Council of Sections