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Prior Disclosure

Prior Disclosure is a "safe harbor" by which importers and drawback filers may report to Customs errors in classification or valuation, and other incorrect information associated with the filing of import or drawback entry.

When properly prepared and timely filed, a prior disclosure protects the importer or drawback filer, and can significantly reduce the amount of penalties that would have been imposed had Customs initiated an administrative penalty action.  In a case involving negligence or gross negligence, Customs is limited to collecting interest on the liquidated amount found owing.

To be valid, a prior disclosure must advise Customs of the circumstances of the violation, including: the nature of the errors or incorrect information submitted; the identity of the entries or period to which the disclosure relates; and, provide Customs with the correct information that should have been given.  If the errors or incorrect information result in a loss of revenue, the importer is required to tender the additional amount owing.  In the case of a drawback filer, it is required to tender any overpayments that may have occurred as a result of the errors.

Timing is often critical in prior disclosure cases, as a prior disclosure is valid only if it is filed before Customs initiates a formal investigation of the wrongdoing, or the prior disclosure is filed by the disclosing party before knowledge of the initiation of the formal investigation.  While a properly prepared prior disclosure can shield an importer or drawback filer from significant penalties, an improperly prepared disclosure will result in the loss of that protection, while notifying Customs of the existence of the problem.

Our attorneys at George R. Tuttle provide experienced guidance to importers and drawback filers throughout the prior disclosure process; including investigation of the circumstances of the violation, evaluation of the nature and extent of errors, preparation of initial disclosure report and calculation and tender of any loss of revenue, and case closure.

Additional information on prior disclosure can be found by clicking on any of the following topics:

Further Reading:

 

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