Greg Husisian, partner and chair of the international trade and national security practice at the law firm of Foley & Lardner, explains why importers should voluntarily disclose to U.S. Customs and Border Protection any underpayment of tariffs.
The risk that U.S. importers face in failing to pay the full amount of tariffs assessed on their goods “has never been greater, for a number of reasons,” Husisian says.
First, in a high-tariff environment, it’s easy to run up underpayments and resulting penalties. Second, Customs today has “unprecedented” access to import data, “which allows them to do sophisticated data mining and find potential underpayments.” Third, the Trump Administration has ordered Customs to prioritize the discovery of tariff underpayments. And fourth, the Department of Justice has identified underpayment as its second biggest enforcement priority (after waste and fraud).
“You add it all up,” Husisian says, “and it’s a sharply increased risk profile for importation.”
With that in mind, Husisian is urging importers to voluntarily disclose any tariff underpayments, before Customs discovers them and launches a formal investigation. In doing so, they’ll have to pay the full amount of the tariffs, along with interest accrued during the delay in doing so. But for the most part, they won’t be subject to heavy penalties for failure to comply — 20% or higher for negligence, 50% or more for gross negligence, and as much as the full value of the goods for fraud. “All that is taken off the table if you do prior disclosure,” Husisian says.
Underpayments can result from five kinds of failures to comply with U.S. trade laws: declaring the wrong country of origin, misvaluing goods by failing to report any ancillary payments, misclassifying goods under the Harmonized Tariff System, misusing free trade agreements, and not declaring antidumping or countervailing duties.
Despite the cost of violating ever-changing tariff rules, “there’s such a huge advantage to be able to do a self-disclosure,” Husisian says.
