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Update on Customs' Focused Assessments and
ISA Programs

April 23, 2004

Importers interested in participating in Customs' Importer Self Assessment (ISA) program, take note, important changes in the application process are in the works.

What Is Customs' ISA Program?

Customs' ISA program allows importers to assume responsibility for their trade compliance.   Importers who wish to participate must demonstrate that they have solid internal controls over their customs transactions, and must also be willing to engage in regular self-assessments and report any errors discovered.   In exchange, Customs removes the ISA participant from audit pools established for comprehensive audits, including Focused Assessments, Drawbacks, and Foreign Trade Zones.

Since the announcement of the ISA program in the fall of 2002, approximately 200 importers have applied to participate in the program.   In many instances, companies have applied for the ISA program only after they have received notice that they have been selected as a candidate for the more intensive and intrusive Customs Focused Assessment Audit.   Customs' Focused Assessment Audits typically take up to a year or more to perform and require the importer to implement Compliance Improvement Plans if any non-compliance is found.

A prerequisite for participation in ISA has always been that the importer be a Certified participant in Customs-Trade Partnership against Terrorism or "C-TPAT."   However, to get the ISA program off the ground, Customs liberally allowed FA audit candidates who were not certified C-TPAT participants to join ISA on the condition that they first applied for C-TPAT.

Rules For Participation In ISA Are Changing

According to Customs' Office of Strategic Trade, Customs will be announcing in the near future that it is tightening up on its participation rules, and any company applying for ISA membership must first be a CTPAT member when it applies for ISA, which, according to Customs, means that the company has filed its C-TPAT Security Profile Questionnaire and has been accepted by CBP.

If a company is notified telephonically and then by follow-up letter that Customs has scheduled it for a Focused Assessment (FA) and the company is not a C-TPAT applicant, Customs will proceed with the FA regardless of whether the importer requests to participate in ISA.

If the company is already C-TPAT certified, it can still apply for ISA after it has been notified that it is scheduled for an FA; however, the timing will be tighter.   Now, applicants will have to submit the requisite questionnaire (whether ISA or FA), with the ISA MOU as a package within a reasonable period of time following the notice, say 30 days, otherwise, Customs will go ahead with the FA.  

According to Customs' Office of Strategic Trade, as of mid-April 2004 it has completed over 200 FA's.   Areas where Regulatory Audit still finds unacceptable controls include classification, value, assists, and trade programs.

Customs' Audit pool is growing.   Currently Customs is targeting mid-sized importers with imports in value of $100 million or more, and who import goods in the primary focus industries, or take advantage of special duty or trade programs.   If your company fits this criteria, and you wish to avoid the intrusion and disruption created by a Focused Assessment Audit, you should consider participating in Customs' ISA and C-TPAT programs.

George Tuttle Law Offices is a Customs and international Trade regulation law firm, and assists importers with preparing for and deal with Customs' audits, including Focused Assessments.   We also assist companies in the development of internal controls over Customs transactions, and in applying for Customs' C-TPAT and ISA programs. If you would like more information on Customs FA, C-TPAT or ISA programs, please visit our website at www.tuttlelaw.com and select the appropriate link, or for more information contact George Tuttle, III at geo@tuttlelaw.com or at (415) 288-0428.

George Tuttle, III is an attorney with the Law Offices of George R. Tuttle in San Francisco. The information in this article is general in nature and is not intended to constitute legal advice or to create an attorney-client relationship with respect to any event or occurrence, and may not be considered as such.

Copyright 2005 by Tuttle Law Offices.

All rights reserved. Information has been obtained from sources believed to be reliable. However, because of the possibility of human or mechanical error by our offices or by others, we do not guarantee the accuracy, adequacy, or completeness of any information and are not responsible for any errors, omissions, or for the results obtained from the use of such information.

 

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