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Bond Insufficiency Letters on the Rise for TIB Activity
May 20, 2008

CBP's Revenue Division is increasing its analysis of continuous bond insufficiency as relates to TIB activity. The analysis process appears to focus on importers with open TIB entries, and determining what the "average duty rate" would have been if the goods had been imported. The average duty rate is based on all TIB activity under the continuous bond over the past 12 months, even activity already closed. An importer's closure rate and compliance do not seem to factor into the determination of the bond amount. Therefore, bond sufficiency is determined based on 10% of annual duties, the TIB exposure or the $50,000 minimum, whichever is greatest.

How You and Your Clients Could be Affected
As an example, an importer recently experienced a situation where their continuous bond was $100,000. This was an adequate amount based on the CBP rule that 10% of duties must be posted for consumption entries. However, it turned out that goods valued at $10,000,000 were TIB activity. CBP, under their increased scrutiny of TIB activity, determined that the duty rate of these goods would average 5% if they were to be entered for consumption. 5% of $10,000,000 equals $500,000, and bond amounts for TIB activity are required to be double the potential duties owed. CBP therefore issued a bond insufficiency notice to the importer requiring that they increase their bond from $100,000 to $1,000,000 within 30 days of the date of notice.

Possible Relief Remedies
CBP will entertain requests to waive or reduce bond increases related to TIB activity if the importer can prove that they have significantly reduced or stopped such activity (for example, if the importer had a special project during the year and it is completed). CBP may grant exceptions in limited circumstances, although there are no guarantees so it is suggested that importers be prompt in closing out their TIB activity to minimize bond amount scrutiny. In addition to lessening the chances of being targeted for bond insufficiency analysis related to TIB activity, it might also provide greater leverage if requesting CBP to waive or reduce a bond increase.

Proactive Measures to Take
We recommend examining your clients' Entry Type 23 (TIB) activity. Is most of the TIB activity open? Can it be closed? What would the duty rates of those open entries be if they were changed to consumption?

Your Roanoke Trade service representative can run a report of all Entry Type 23 activity under your continuous bonds on file with us. We can also walk you through the bond amount determination process. Please contact us if we may answer any questions or be of further assistance. In the meantime, Roanoke Trade is advocating on behalf of its clients for more reasonable bond determinations on TIB activity. Thank you for your continued business.


Roanoke Trade Services, Inc.
phone: 1-800-ROANOKE