CBP 301 Bond Form Guidance and Information for Completing Correctly!

Transcription

1 Roanoke Trade Services, Inc. presents CBP 301 Bond Form Guidance and Information for Completing Correctly! Presenter: Kathleen Dorman, Bond Manager Page 1

2 Welcome NTCBFFA Page 2

3 Welcome a Little About Us! Kathleen Dorman, Roanoke Trade s Bond Manager - Houston office Sheila Skipper, Regional Vice President, manages Roanoke Trade s Houston and Miami offices Roanoke Trade writes customs bonds and marine cargo insurance Member of Munich Re Group and affiliate of Watkins Syndicate at Lloyd s of London 11 US locations and resources worldwide Providing transportation-related insurance solutions since 1935 Page 3

4 Customs Bond Form CBP Page 4

5 So What s the Big Deal? U.S. Customs and Border Protection (CBP) Headquarters Office recently provided field offices with guidelines on proper completion of single transaction bond (STB), with instructions for increased review and scrutiny by local CBP ports U.S. CUSTOMS & BORDER PROTECTION File: PH-OFO TRADE INFORMATION NOTICE Date: July 27, 2009 Page 5

6 It May Become a Bigger Deal! CBP has noticed numerous single transaction bonds (STBs) that are not in compliance... In addition to requesting corrected STBs, CBP advised: Tracking instances of non-compliance Repeat violations will result in issuance of warning letters and possible penalty action U.S. CUSTOMS & BORDER PROTECTION Pipeline 10-18A Port of Chicago - Pipeline Date: October 5, 2010 Page 6

7 Customs Bonds What is a customs bond? Required by law/regulation Guarantees: Payment of duties/taxes/fees Compliance with law/regulations applicable to goods or activities Parties are: USA (CBP) = obligee Importer or other party promising to pay/perform = principal T-Listed insurance company who will pay if principal does not = surety Page 7

8 Customs Bonds So, since a customs bond PROTECTS THE REVENUE OF THE UNITED STATES and ASSURES COMPLIANCE with any pertinent law, regulation or instruction then Information on bond can affect both CBP s ability to collect, as well as surety s ability to subrogate because customs bonds are NOT insurance; they re an alternative to posting CASH with CBP (Cash-in-Lieu of Bond) Our discussion will focus on preparing Import bonds, both Single Transaction (STB) and Continuous Bonds (CTB) Page 8

9 CBP 301 Bond Form American Alternative Insurance Corporation (A Delaware Corporation) 555 College Road East Princeton, NJ Page 9

10 Completing the Bond Section I - Single Transaction Bonds 02/01/2011 X QQQ /01/ Execution Date: Execution date (signed) by either principal or AIF Single Transaction Bond: Identification of transaction: Date of transaction: Port code: Mark with X Line out Continuous Bond and Effective date below Single Transaction Bond selection Transaction entry number; complete only for STB must match entry number on CBP 3461 & CBP 7501 Entry date 4 digit port code Page 10

11 Completing the Bond Section I - Continuous Bonds 02/01/2011 X 02/15/2011 Execution Date: Continuous bond: Effective date: Port code: Execution date (signed) by either principal or AIF Mark with X Line out Single Transaction Bond and Identification of transaction above Continuous Bond selection Date bond coverage begins Old rule = bond must be filed 10 business days in advance of effective date. NOW new CTBs can generally be processed in 5 business days. All Continuous Bonds = Port code 9900 but do not show on bond, per Revenue Division Page 11

12 Completing the Bond Section II Activity Code (Bond Type) and Amount X $2,344 Mark appropriate Activity Code with X, only one activity code marked per bond Insert bond amount required by CBP (Customs Directive , Monetary Guidelines for Setting Bond Amounts, July 23, 1991: Bond amount should be set at one times entered value plus duties, fees and taxes, OR three times entered value for merchandise submitted with other agency requirements if risk/threat to public health and safety) Line out areas in Section II not used and not already lined out Page 12

13 Completing the Bond Section III Unincorporated Divisions / Trade Names XYZ Importing Company ABC Clothing Corporation 2 Only for listing trade names and/or unincorporated divisions permitted to use bond. Division s HQ generally listed in principal section with importer number ending in suffix 00. Suffixes for divisions can be numeric or alpha characters but can not include letters I, O or Z Total number of trade names or unincorporated divisions listed in Section III must be entered - if none, mark zero (0) List additional trade names or unincorporated divisions on back of bond if all do not fit on front of bond Page 13

14 Completing the Bond Section III Unincorporated Divisions / Trade Names Section III continued on back of bond Additional unincorporated divisions / trade names listed on back of bond Back of bond REQUIRED but can be blank Page 14

15 Completing the Bond Witnesses (back of bond) Only necessary when signed as individual or partner If broker signs on behalf of importer, section does not need to be completed Page 15

16 Completing the Bond Principal, Co-Principal and Surety Information bottom half of bond ABC Corporation of America (A Delaware Corporation) 9 Main Street Huntsville, AL American Alternative Insurance Corporation (A Delaware Corporation) 555 College Road East Princeton, NJ Matthew L. Zehner Page 16

17 Completing the Bond Principal Section - Name, Address ABC Corporation of America and Importer Number (A Delaware Corporation) 9 Main Street Huntsville, AL Principal s full legal name (certain abbreviations are allowed as CBP limits number of characters) Page 17

18 Principal Names Sole Proprietor s complete name: John Smith DBA Smith Furniture Company Incorrect: Smith Furniture Company Partnership - Incorrect: S & J Imports If a limited partnership: If a general partnership: S & J Imports LP (A Partnership) S & J Imports (A Partnership comprised of John Smith & David Jones) If principal s business type is Limited Partnership, provide copy of complete Partnership agreement to CBP with CTB Corporation s complete name: S & J Imports LLC OR S & J Imports Inc. (a California LLC) OR (A California Corporation) Incorrect: S & J Imports LLCs may be designated as either corporation or partnership, depending on how they pay their taxes (need to ask although some LLCs indicate this by checking the corporation or partnership box on POA or application) Page 18

19 Completing the Bond Principal Section Signature Box Digital signature image here ABC ABC Corporation Corporation of of America America (A (A Delaware Delaware Corporation) Corporation) 9 Main Main Street Street Huntsville, Hunstville, AL AL Joan Doe, ABC Broker, Attorney-in-Fact Authorized signature of principal - - Customs broker may sign as Attorney-in-Fact under POA;, signature must read: Joan Doe, ABC Broker, Attorney-in-Fact All information must STAY inside box, NO ENCROACHING If 301 signed by bond principal, signature must be of officer of company (President, CEO, CFO, or VP) or owner. Signature line should read: John Doe, President, ABC Importers, Importer of Record Page 19

20 Completing the Bond Co-Principals Digital signature image here Digital signature image here ABC Corporation of America (A Delaware Corporation) 9 Main Street Hunstville, AL ABC Corporation of America (A California Corporation) 456 Grapevine Lane Los Angeles, CA Joan Doe, ABC Broker, Attorney-in-Fact Joan Doe, ABC Broker, Attorney-in-Fact In order to list more than one principal on a CTB, the companies must be related and same business type Companies listed as co-principals are separate legal entities and will always have different tax ID numbers as opposed to trade names and unincorporated divisions which have same importer number but different suffixes If more than two co-principals, co-principal addendum must be used to list additional subsidiaries (it s an extension of bond form) Customs broker must have separate POA for each subsidiary that s a separate legal entity (different importer numbers different legal entities) Page 20

21 Completing the Bond Surety Section (usually pre-printed on bond) American Alternative Insurance Corporation (A Delaware Corporation) 555 College Road East Princeton, NJ Matthew L. Zehner Complete name and address of surety and surety code Surety agent s name, signature and social security number should be at bottom of form Page 21

22 Completing the Bond Most common errors? Principal Information (Full legal name, address, state of incorporation ) Broker s AIF signature must include individual signer s name, company (CHB) name and AIF Information must fit within signature box and not encroach into any other areas or data! Facsimile signatures permitted Broker A / Broker B Page 22

23 Broker A / Broker B No consensus, policy varies? CBP says there has been some confusion in the trade over the issuance of STBs by out-port customs brokers. An STB is customs business and entry specific and therefore can only be issued by a customs broker permitted in the port of entry. See copy of HQ Ruling Page 23

24 Determining Bond Amounts Determined by CBP Directive , not by surety! Customs website excellent resource for staying current as there have been changes in monetary guidelines for determining bond amounts Page 24

25 Import Bond Amounts Single Transaction Bond Generally, a single transaction, Activity Code 1, Importer or Broker bond (for consumption entry, immediate delivery, to cover articles entered or withdrawn from warehouse, etc.) will be executed in an amount NOT LESS THAN TOTAL ENTERED VALUE PLUS ALL DUTIES, TAXES AND FEES which apply. All taxes and special duties must be included in computation (excise taxes, antidumping, countervailing duties, etc.) Example: Value of shipment = $1,000,000 + Duties = $3,000 + Fees = $400 STB Amount for this shipment = $1,003,400 Page 25

26 Import Bond Amounts - STB Unconditionally duty-free If not subject to quota visa or other agency requirements, bond may be reduced to 10% of total entered value Unconditionally duty-free = free of duty without specific conditions Examples: Paintings, books or articles duty-free regardless of country or origin Returned American goods are NOT unconditionally duty-free No prior approval needed; contact Commodity Team if questions Minimum bond amount: no less than $100 per 19 CFR (a); provide add slip showing calculations Conditionally duty-free Conditionally duty-free articles do not meet guidelines for 10% bond amount Examples: GSP, NAFTZ, antiques, articles duty-free depending on country of origin Page 26

27 Import Bond Amounts STB Other Agency Requirements Merchandise subject to other agency requirements due to public health and safety require bond in amount not less than three (3) times total entered value of merchandise Food and Drug Administration (FDA) all Environmental Protection Agency (EPA) all Bureau of Alcohol, Tobacco, Firearms & Explosives (BATFE) - alcoholic beverages and distilled spirits only Consumer Product Safety Commission (CPSC) toys and fireworks if sample by CBP for CPSC testing Department of Agriculture, Agricultural Marketing Service (AMS) subject to marketing orders Federal Communications Commission (FCC) all Toxic Substances Control Act (TOSCA) all Flammable Fabrics three times total entered value Page 27

28 Import Bond Amounts - STB Quota / Visa Bond in amount not less than three (3) times total entered value of merchandise required for all merchandise subject to quota/visa requirements Combination of Merchandise If entry includes combination of merchandise falling into multiple categories, Port Director may apply different bond amount calculations to merchandise in each category to arrive at final bond amount Page 28

29 Import Bond Amounts - STB Permanent Exhibit Bond Covers articles for exhibitions Bond amount equal to estimated duties, as determined at time of entry If free of duty, bond liability amount small include one times the Merchandise Processing Fee/MPF or $100 (whichever greater) Trade Fair Bond Bond liability amount fixed to amount Port Director deems necessary Temporary Importation under Bond Bond liability amount fixed to amount Port Director deems necessary to protect revenue, but not less than amount equal to double estimated duties Samples used for taking orders, motion picture advertising films, professional equipment, tools of trade and repair components for professional equipment, bond amount shall be 110 percent (110%) of the estimated duties Computations considered for all taxes and special duties (Example: excise taxes, antidumping, countervailing duties, etc. applicable) Page 29

30 Import Bond Amounts - CTBs Continuous Bonds Minimum bond amount is $50,000, nearest to 10% of duties, taxes and fees paid during last 12 months, subject to one of the following two formulas: 1. If Duties, Taxes and Fees $0 - $1,000,000 Take 10% and round up to nearest $10,000 Example: Total Value = $400,000 Total Duties = 0 (duty free commodity) Total Fees = $2,000 DTF < $1,000,000 so bond amount written in multiples of $10,000, rounded UP to nearest $10,000. So CTB Amount = $50,000 (CTBs capacity = $500,000) Page 30

31 Import Bond Amounts - CTBs Continuous Bonds (continued) 2. If Duties, Taxes and Fees Over $1,000,000 - round up to nearest $100,000 Example: Total Value = $22,400,000 Total Duties = $1,990,000 Total Fees = $20,000 Total DTF = $2,010,000 ($1,990,000 + $20,000 = $2,010,000) DTF > $1,000,000 so bond amount written in multiples of $100,000, rounded UP to nearest $100,000 So, CTB Amount should be $300,000 (CTBs capacity is $3 Million in DTF) Page 31

32 Hot Topics Page 32

33 Importer Issues CTBs can be rendered Insufficient for: Outstanding debt issues Failure to comply with Formal Demand to Increase Bond Bad address Use of an invalid importer number Failure to provide any required bond paperwork Failure to comply with rejection of termination request Failure to ANNUALLY deposit the required cash-in-lieu of surety for a CTB obtained under 19 CFR Failure to comply with specific mandates/requests Page 33

34 Industry Changes Changes in bond industry and international trade impact importers and intermediaries CBP demands on surety have doubled over a five year period this is NOT counting 10+2 Closer scrutiny by sureties and reinsurers watching their AGGREGATE liability (total exposure, all bond amounts combined) Very few reinsurers willing to write surety business Surety buying insurance to limit/spread risk Fewer still willing to write customs bond reinsurance Numerous customs bond providers have exited customs bond business Long claims tail (4 7 years) Insurers looking for better use of capacity and ROI Many corporate bankruptcies Page 34

35 Need Assistance? Many bonding companies use automated online bond issuance programs. If the principal information is entered correctly the first time, many potential errors can be eliminated. Bond Manual and Bond Amount Guidelines available online Customs bond riders, CBP 301 application and other bond related forms as fillable templates are available through FastBond or from Customer Support section of Never hesitate to contact Roanoke Trade s experienced staff Page 35

36 About Roanoke Trade Based in 11 US Cities with a Network of Agents and Service Companies Worldwide Baltimore Boston Charleston Chicago Houston Los Angeles Miami New York San Francisco Seattle Tampa Over 75 years experience in managing the risks associated with global trade and transportation ROANOKE info@roanoketrade.com Page 36

37 Questions Page 37

38 Thank You! Thank you for your time and attention. We hope that you found this seminar productive, practical and useful! Page 38