May 4, 2022 | Jessica Woltering U.S. Import Compliance Manager
This article serves as a companion piece to the Trade and Tariff article posted on February 16, 2022, "The Risk of Taking Deductions—Is It Worth the Cost Savings?", which discussed the details and risks of taking deductions from the Total Entered Value (TEV) of a shipment. In turn, this article reviews the costs U.S. Customs and Border Protection (CBP) considers additions to the TEV of an entry and how to determine if these costs need to be included in the TEV to ensure proper declaration of imported goods to CBP.
CBP is the second largest revenue collector for the U.S. government and revenue collection is one of the oldest functions of CBP. Revenue was redesignated a Priority Trade Issue as part of the Trade Facilitation and Trade Enforcement Act (TFTEA) of 2015, which was signed into law in February 2016.
Ensuring that imported goods are properly valued and inclusive of all costs CBP considers part of the TEV is one important focal point in audits on importers, because of attempts to evade duties and fees owed to CBP on imported goods. If irregularities are found during audits or on normal reviews of entry summaries, this gives CBP the foundation needed to dive deeper into financial and manufacturing records to look for additional issues.
According to the Trade Statistics area in CBP’s Newsroom, in Fiscal Year (FY) 2018, CBP performed 435 importer audits and collected an additional $42.2 million of lost revenue. In FY 2021, CBP performed 442 audits and the lost revenue that was collected rose 196% to $132.2 million.
Total Entered Value has become a larger focal point in the last four years with the addition of Section 232 and Section 301 tariffs. In addition to the regular duties and taxes owed, there are other revenue-generating programs and conditions, such as anti-dumping and countervailing duties, Section 201 tariffs on certain items, tariff rate quotas, and most recently the revocation of Russia’s Most Favored Nation status, making Russian goods subject to the higher Column 2 tariff rates.
This list does not include the possible misuse of cost-saving programs for importers, which can decrease the revenue owed to CBP. Use or misuse of these programs can affect the duties and taxes due to the U.S. government.
There are multiple areas that CBP focuses on during an entry review to ensure that importers are not evading duties and fees:
Total Entered Value is made up of transaction value, the price actually paid or payable for the merchandise when sold for exportation to the United States, plus:
If any of these costs are incurred, they should be added to the price actually paid or payable and declared to CBP as dutiable additions to the transaction value.
Transaction value does not include:
In 2007, CBP renamed its five Strategic Trade Centers, and the Revenue National Targeting and Analysis Group (NTAG) was formed in Chicago. Revenue NTAG uses risk management techniques to support trade security and trade compliance. NTAG also targets and identifies concerns that place revenue at risk through a variety of methods, including—analyzing import data to identify revenue risk, monitoring the effectiveness of targeting programs, investigating referrals received through the e-Allegations system, and ensuring oversight of the drawback process.
C.H. Robinson’s Customs experts are available to discuss any valuation questions or situations importers may have to determine if costs should be added to the Total Entered Value of entries or not. Our customs employees are knowledgeable about the intricacies of customs valuation and can help educate importers on valuation requirements or assist with determining how to declare these costs. Connect with one of our trade policy experts to learn more.
Our information is compiled from a number of sources that to the best of our knowledge are accurate and correct. It is always the intent of our company to present accurate information. C.H. Robinson accepts no liability or responsibility for the information published herein.