Ask The Attorney

Last month Liberty International was pleased to announce a new monthly edition service of Global Facts called "Ask the Attorney." We have partnered with Ms. Barbara Dawley, a partner at Meeks, Sheppard, Leo, & Pillsbury to offer this new service to our clients. She has generously offered expert advice through an anonymous question and answer column. Below is a general summary of two questions submitted in April.

Please continue to submit your practical questions about import compliance and general import law to Kate Palermo at kpalermo@libertyint.com and stay tuned for future editions of "Ask the Attorney."

Question Presented:

What are my exact record keeping requirements with respect to U.S. Customs and Border Protection ("CBP")?  Given that I can always retrieve entry records from my Customs broker, must I also keep a paper copy of the required records?

Response to first question:

Your questions are very important as recordkeeping is a key part of any CBP compliance program, and failure to maintain required records can result in penalties.

I presume that you are among those persons who are required to keep records.  Those parties include owners, importers, consignees, importers of record, entry filers or others who import merchandise into the U.S., file drawback claims, or transport or store merchandise under CBP bond.  Additionally, agents, such as Customs brokers, must also maintain records.

The CBP recordkeeping requirements are specifically addressed in the federal regulations at 19 C.F.R. Part 163 and the term "records" is defined within that section.  While the term "records" include import entries themselves (such as a CF 7501 Entry Summary form), the actual scope of the records that must be maintained is much broader and includes not only the entries and specific declarations and certificates that are required in specific instances (NAFTA certificates for example), but also extends to any information required for the entry such as financial accounting data, technical data, correspondence etc.  So the short answer is that you must keep all records that form a complete audit trail which includes all records normally kept in the ordinary course of business such as purchase orders and related correspondence, invoices, payment records, receiving records, entry forms, special program certificates etc. 

In addition, if your import involves any of the statutory additions that must be declared as part of Transaction Value, you must maintain records of those as well.  While a detailed discussion of the statutory additions is outside the scope of this response, they include selling commissions, royalty or license fees, assists, packing, and proceeds.  We will of course expand on this subject should you, or another reader, wish to direct a question to us!      

A complete list of all the records that are required for the entry of merchandise is the so called "(a)(1)(A) list."  While the list is too lengthy to be reproduced here, it can be found in 19 U.S.C. § 1509(a)(1)(A) and is also available in an Informed Compliance Publication ("ICP") issued by CBP in January, 2005, titled What Every Member of the Trade Community Should Know About Recordkeeping.  This ICP can be viewed on CBP's website http://www.cbp.gov.

Generally speaking, most records must be kept for 5 years from the date of entry, if the record relates to an entry, or 5 years from the date of the activity which required creation of the record.  For example, if you file warehouse withdrawals against a warehouse entry, records relating to the withdrawal must be maintained for 5 years from the date of the warehouse withdrawal rather than from the date of the underlying warehouse entry.  There are of course specific exceptions to the 5 year rule.  Most notably for importers, perhaps, is that packing lists need to be kept for 60 days from the end of the release or conditional release period, whichever is later, unless a demand for redelivery is made; in which case, the packing list must be kept for 60 days from the date of redelivery.

Response to question two:

While your broker can provide you with copies of the entries filed on your behalf, this alone does not relieve you of the responsibility of keeping records.  You are required to maintain all the records.

The records that you are required to keep must be "original records" unless an alternative format is formally approved by CBP. The term "original records" refers to the condition in which the records were made or received by you.  For example, if your broker provides you with CF 7501's in an electronic format rather than paper, the electronic version must be maintained.  Conversely, if you receive a facsimile or photocopy of a required record, you must maintain the facsimile or photocopy.

As a final note, recordkeeping is required and should be part of your overall CBP compliance program.

Ms. Dawley is a partner in the law firm of Meeks, Sheppard, Leo & Pillsbury.  The firm, which specializes in representing clients on customs and related international trade issues, has offices in New York, Connecticut, and Newport Beach, CA.  She can be reached at (203) 256-1401 or Barbara.Dawley@mscustoms.com. For further information please visit www.mscustoms.com.

Disclaimer:  Information provided is a general summary of fact-specific issues and does not constitute or create an attorney-client relationship.  Before you act on any information provided, you should seek professional advice regarding its application to your specific circumstances.