The Government Comes Calling

There are many occasions when the Government, for our purposes, let’s say US Customs, takes an interest in something your company is doing. Does that sound like attention? Yup, but not all attention is good!  In fact, most governments, let’s say U.S customs communications are down-right scary, so we saved this post for October. Think spider webs and bad dreams. Customs can contact you in a variety of ways, and each has its own challenges. What ways might you hear from them, and how should you respond to each? First of all, be aware, which hopefully you are, that it is the exception that Customs contacts you in any way on any of your import transactions or processes, so, right away, this can be a red flag. Any one of these can imply a deeper risk:

U.S. Customs communications

1. Customs asks your broker to see the documents accompanying an import shipment (“Docs required”).
2. Customs pulls your container for a VACIS examination.
3. Customs pulls your container for a physical examination/sampling.
4. Customs sends a CF-28, a “Request for Information” (RFI).
5. Customs sends a CF-29, a “Notice of Action” (NOA), which can be “taken” or “proposed”.
6. Customs sends a CF-4647, a “Notice of Redelivery”.
7. Customs calls and asks where your import records are kept.
8. Customs sends a letter saying that your company has been selected as a possible candidate for a “Focused Assessment” (Customs Audit).
9. Customs comes to your offices to talk to someone.
10. Customs comes to your offices with a subpoena, tells most folks to go home, and keeps a few select officers for questioning.

Do you notice anything about the list above? Read on…

What Should YOU Do?

Second, each method that Customs might approach you is different, carried out, generally, by different areas of their organization, and looking at and for different things. If you’ll notice, the list above is arranged from the most routine to the least routine and your response to each should vary with the level of potential risk with which it’s associated, as described below, but before that… Are you prepared for these potential official communications? How? We strongly recommend that, as a part of your robust Customs Compliance Program,  you have a section on ”Official Communications”. This section should describe the various methods and levels of Customs requests or contact, which are routine or non-routine, an escalation procedure depending on method and level, and provide training to all affected parties on this procedure. Here’s a sample escalation chart:

Communication Received	Routine?	Method	Level	Involve	Involve
Docs Required	YES	Via Broker	1	None unless more	—
VACIS Exam	MAYBE	Via Broker	1	Supply Chain re: Delay	—
Physical Exam	MAYBE	Via Broker	1	Supply Chain re: Delay	—
CF-28/RFI	No	Via Broker/ACE/Mail*	3	ITC	Legal, if issue warrants
CF-29/NOA	No	Via Broker/ACE/Mail*	3	ITC	Legal, if issue warrants
CF-4647/NFR	No	Via Broker/ACE/Mail*	3	Receiving – to return; Supply Chain re: Delay	Legal, if issue warrants
Audit Letter	No	Mail	4	ITC	Legal
Agent in Lobby without Warrant/Subpoena	No	In Person**	4	ITC	Legal
Agent in Lobby with Warrant/Subpoena	No	In Person**	5	Legal	ITC

(*) Create training program for the mailroom so that any mail from Customs, or other official communications, are properly directed internally to International Trade Compliance (ITC). Include copies of sample envelopes for the mailroom personnel to see what the mail might look like.

(**) Create training program for the Lobby personnel (security, etc.) on what to do if a government agency visits. Without a Warrant/Subpoena, they should ask that party to please wait while they call ITC. ITC may call Legal. The Lobby personnel should be very polite but firm that the Agent isn’t allowed in the building without escort (especially if your company is C-TPAT certified). These functions will handle the issue. If there is a Warrant/Subpoena, Legal should be called immediately.

What are the Risks?

Each action by Customs has its own potential risks. It’s essential to know what is routine for your industry and your company. Do you regularly get “docs required” on your entries? Why? Has it escalated? Do you often have Customs take samples of your imported goods?  If these are routine for you, treat them that way, but, below the BOLD line on the chart above: these actions are non-routine and should be treated with the utmost of care and respect! Let’s review each in turn:

CF-28

A CF-28 is typically issued by an Import Specialist at the port of entry for your goods. These Import Specialists are more or less expert in certain areas of the tariff, specializing in goods by product or commodity. With the advent of the Centers of Excellence and Expertise, this practice may be subject to change. Under a CF-28, Customs generally asks one or more questions about one or two (or many similar) recent entries that have caught the attention of the Import Specialist or some other Customs official for some reason. These need to be responded to, typically, within 30 days. A CF-28, Request for Information, is a serious matter. Answering in a way that’s incomplete or inaccurate, or untimely, can result in an escalation of your case within Customs. Even a seemingly innocent question can lead to more questions, and more questions…

CF-29

CF-29s are Notices of Action. The form can give notice that the action is “proposed”, meaning that  the importer can defend a current position on a particular issue, or that the action has been “taken”, in which case the importer must adhere to customs position once they receive this form, but have the opportunity to present their case to Customs for future changes. Typically, the importer has between 20 – 30 days to respond to a CF-29, and, again, not answering completely or accurately can easily turn what appears to be an innocent matter into a nightmare, on Elm Street, or elsewhere!

CF-4647

This is a Notice to Redeliver. This form is issued as goods are conditionally released from Customs custody. On occasion, Customs will discover that the conditions required for release have not been met; this could be due to another government agency requirement or otherwise. In any case, it is essential that you contact your receiving department ASAP to intercept the receipt of the goods so they can be promptly redelivered.

Audit Letter

It may not be too late… Too late to (a) submit a Prior Disclosure to protect your company from penalties for any inadvertent errors and voluntarily tender any identified loss of revenue; and (b) possibly join the Importer Self-Assessment (ISA) program, if you’re company is C-TPAT certified. In any case, fasten your seatbelt for a LOT of work, potentially for a very long time. Some audits have lasted for up to five years. Hope this isn’t you!

Agent in Lobby

Ooops. What have you done to deserve this attention? This is a very rare occurrence and is generally not good. Be sure that your Lobby security guards or other personnel are well trained for this potential event and that the Agent is politely requested to wait while you, and/or your general Counsel come to greet your guest.

Agent in Lobby with Warrant/Subpoena

You’ve hit the awful jackpot. This is beyond scary; it’s downright terrifying, and it does happen. Clearly, the Agent has the right to enter, search and so on, in accordance with the Warrant or Subpoena in his possession. Your procedures should clearly note that your Legal Department should be called by the Lobby personnel immediately if you win this scary lottery. In-house counsel, possibly in dialogue with your Trade Compliance folks, may also wish to seek outside legal support via your trade attorney. This can get bad quickly.

What can you do to Ease the Pain?

It may be tempting to quickly dispense with the issue at hand internally. It might be a bit faster, and it may cost less, at least initially. But wait! Any non-routine Customs inquiry or communication, or visit can be far more risky than may appear on its surface. Please, I implore you, get professional help in responding to these inquiries, communications, and visits. Remember: Trick or Treat? Mostly trick!