Importing has never been riskier. The combination of a high-tariff environment, increasingly sophisticated data analytics by U.S. Customs and Border Protection (CBP), and a tougher penalty posture by the federal government means that even minor compliance lapses can carry major consequences. In this environment, voluntary self-disclosures — long a risk-mitigation tool used by savvy importers — have become a vital strategy for managing Customs risk.

According to 19 C.F.R. § 162.74, “CBP shall consider the fact that a violation was voluntarily disclosed prior to or without knowledge of the commencement of a formal investigation as a mitigating factor in determining the amount of any penalty.” In fact, for many violations (those involving negligence rather than fraud) CBP regulations direct settlement with no penalty, so long as the disclosure is completed and back duties and interest are paid. 

In addition, voluntary disclosures show CBP that an importer takes its compliance obligations seriously, and allows the importer to set the stage with its own explanation, analysis and corrective actions, rather than leaving CBP to draw its own conclusions based on incomplete or adverse data. Further, the process of preparing a disclosure often reveals gaps in procedures, training, or oversight, which can be used to strengthen internal controls and reduce the risk of future violations.

To access these benefits, the disclosure must be complete, timely and properly constructed. This is where best practices for voluntary disclosures come into play. Importers making disclosures should consider the following key considerations:

Act quickly, but carefully. Timing is critical. To receive full mitigation benefits, a disclosure must be submitted before CBP initiates any inquiry into the issue. If more time is needed to complete the internal investigation, importers can initiate a disclosure by filing a preliminary marker letter to preserve disclosure benefits while conducting a full review. 

Closely monitor customs communications. If an importer is aware of potential Customs compliance issues and is actively investigating whether a voluntary self-disclosure is warranted, it’s critical to continue closely monitoring Customs correspondence, particularly Form 28 Requests for Information and Form 29 Notices of Action. If a Form 28 or 29 is received before a disclosure is initiated, the importer may still preserve the ability to make a valid disclosure by promptly submitting a voluntary disclosure marker letter on the same subject matter, provided the government has not yet discovered the specific violation in question and initiated a formal investigation. 

Determine whether to conduct a limited or full disclosure. A limited disclosure addresses a specific issue, such as misclassification or undervaluation, certain entry lines, a defined time period, or specific ports. By contrast, a full disclosure encompasses all entries, across all ports of entry, for the entire five-year statute of limitations period. While more resource-intensive, a full disclosure may be appropriate when there is uncertainty about the scope of the import issues, when internal controls have been weak, or when similar or unknown errors could have occurred in other areas. 

Conduct a thorough internal review. Once a voluntary self-disclosure is initiated, the importer must conduct a comprehensive and well-documented internal review to determine the full extent of the potential violation. Key elements of the review include:

Identifying the nature and root cause of the violation. Importers should determine whether the issue stems from misclassification, undervaluation, false country of origin declarations, anti-dumping/countervailing duty misapplication, or importing missteps. Understanding the underlying cause, such as inadequate training, bad oversight of Customs brokers, or poor classification practices is essential for completing the disclosure and preventing future recurrence.

Reviewing internal policies and controls that failed to prevent the error. The importer should assess internal procedures, roles and oversight mechanisms to identify where controls broke down. 

Identifying all affected entries. A full disclosure requires the identification and correction of every affected entry across all ports of entry. This often involves extensive data-gathering from customs brokers, freight forwarders and internal systems, as well as line-by-line review of entry summaries, to allow for verification of accuracy or correction of errors.

Determining the full timeframe of the violation. CBP expects full disclosures to cover all entries through the five-year statute of limitations (with Customs requesting a waiver of the statute of limitations to ensure no entries roll off during the review). Importers should not stop at liquidation, as entries go all the way back to the very first entry five years before the initiation of the voluntary self-disclosure.

Reviewing for similar violations in other product lines, business units, or supply chains. Errors are often systemic. Importers should not limit the review to the discrete product or business unit where the issue was found but should evaluate whether similar problems exist elsewhere. If the importer began with a limited disclosure, the discovery of additional errors may lead to the need to move to a full disclosure.

Document methodology clearly and rigorously. Thorough, transparent, and well-organized documentation is essential to the credibility and success of any voluntary self-disclosure. CBP expects to see not only a clear narrative of what went wrong, but also a robust explanation of how the importer determined the full scope of the issue and calculated the duties owed. The disclosure package should include:

A written narrative describing what happened and why. This should tell the story of the violation in a clear and factual manner, including when and how the error was discovered, what caused it, and how it went undetected. 

An explanation of how the company identified the scope of affected entries. Importers should detail the specific process used to identify all impacted entries, including the data sources reviewed, search parameters applied, and any filters or criteria used to determine which entries were affected.

An explanation of the review methodology. Importers should lay out the methodology of the review and provide a guide to the submitted spreadsheet of entries. To the extent that the importer needed to fill in informational gaps, such as for older entries missing certain information, the narrative should lay out how any gaps were filled.

A step-by-step outline of the calculation of duties owed. The disclosure should include a transparent explanation of how the importer calculated the monetary impact of the violation. 

A record of any prior communication with CBP. If there have been any relevant communications with CBP, such as prior advisory opinion requests, rulings on protests, responses to Form 28s or Form 29s, those should be disclosed and included in the submission if appropriate.

Consider statistical sampling when appropriate. In high-volume cases, statistical sampling can be a practical and CBP-accepted approach. Best practices for sampling include:

• Consulting with trade statisticians or professionals familiar with CBP expectations.
• Clearly defining the population of entries.
• Using random sampling with proper stratification if necessary.
• Ensuring confidence intervals and error margins are defensible.
• Explaining how projected liability was calculated from the sample data.
• Working through the Customs guidance regarding statistical sampling to show how each requirement was met.

If the importer uses statistical sampling to determine the scope of the violation or calculate duties owed, the disclosure must include a thorough explanation of the methodology. This should cover the sample size, confidence level, margin of error, selection criteria and how the results were projected to the full population. CBP expects the methodology to be statistically valid and sufficiently rigorous to support the accuracy of the projected results.

Include a corrective action plan. CBP wants to see not just that an importer has discovered and disclosed errors, but also that it has taken meaningful steps to prevent recurrence. A disclosure should include a corrective action statement, covering:

• A created or updated Customs Manual, standard operating procedures, or tariff tools.
• Creation or updating of a Customs Classification Index.
• New or enhanced training for relevant personnel.
• Corrective entries or protests filed as needed, such as for entries falling within the Post-Summary Corrections period.
• The creation or updating of a system for tracking assists.

Follow up and confirm closure. Even after a disclosure is filed, the process is not over. Companies should:

• Monitor the status of the disclosure with CBP.
• Respond promptly to any CBP questions or requests for additional documentation.
• Confirm that CBP is granting offsetting.
• Confirm that CBP has issued a closing letter or decision accepting the disclosure (which it may not issue if the disclosure shows a net overpayment after offsetting, which sometimes occurs).
• Retain all disclosure documentation in case of future audits or enforcement actions.

In a world of elevated tariffs, aggressive Customs enforcement and advanced data mining, voluntary disclosures are more essential than ever for importers managing their trade-compliance risks. But to be effective, disclosures must be structured, comprehensive, and credible. Following these best practices will ensures that voluntary disclosures achieve their goal: resolving past mistakes, while paving the way for a stronger, more compliant future.

Greg Husisian is chair of the International Trade & National Security Practice of Foley & Lardner LLP.