How CBP sizes a Section 1592 penalty, worked on one set of entry lines

What two numbers decide the size of a 1592 penalty?

A civil penalty under 19 U.S.C. 1592 is sized from the culpability level and the loss of duties. Everything else in the process (the mitigating factors, the petition, the prior disclosure) moves the figure within limits those two set.

The culpability level is negligence, gross negligence or fraud. CBP's guidelines in 19 CFR part 171, Appendix B, paragraph (C), define them. Negligence is a failure to exercise the reasonable care and competence expected of a person in the same circumstances. Gross negligence is acting with actual knowledge of or wanton disregard for the relevant facts and with indifference to the statutory obligations. Fraud is a material false statement, omission or act committed knowingly, voluntarily and intentionally, established by clear and convincing evidence.

The loss of duties is defined in 19 CFR 162.71 and Appendix B (D). It counts every duty, tax and fee the violation moved, including marking, antidumping and countervailing duties and fees such as the merchandise processing fee and the harbor maintenance fee (Appendix B (D)(1)). It is split into an actual loss, on entries whose liquidation had become final, and a potential loss, on entries still open (162.71(a)). The penalty multiples use the total of the two (Appendix B (D)(5)), and paying either one does not reduce that total.

This page works both through the law on one set of lines. Where the numbers come from in a real case, the pre-penalty notice, is covered in what to do with a CBP pre-penalty notice. This page describes how the figures are computed and is not legal advice; once a notice is received, involve trade counsel.

What are the lines in the worked example?

An importer brought in one product family on four entries. Its classification carried an illustrative general rate of 2.5 percent; the number CBP says was correct carried 6.5 percent on every entry date. There were no Chapter 99 duties on either number and the entered value is unchanged, so the merchandise processing fee does not move. The domestic value of the goods, which caps every range and is the fraud ceiling, is taken as $3,000,000. The date of the calculation is November 20, 2026.

The total loss of duty is $80,000. The dutiable value is $2,000,000.

If the error had been in value rather than classification, for example an assist left out of the entered value, the MPF would also have been underpaid on each entry, up to the per-entry maximum, and that shortfall would count in the loss under Appendix B (D)(1).

What are the ceilings and the normal ranges on these lines?

19 U.S.C. 1592(c) sets the maximum penalty for each culpability level, and 19 CFR 162.73(a) repeats it. Appendix B (F)(2) sets the range CBP uses to decide the penalty, in multiples of the total loss of duty, always capped at the domestic value.

Three things in that table matter more than the numbers.

The ranges do not overlap. Appendix B's negligence range stops at 2 times the loss and its gross negligence range starts at 2.5 times, so on any set of lines the cheapest gross negligence outcome costs more than the dearest negligence one: here $200,000 against $160,000. Appendix B (E)(2)(b) adds a procedural point that makes the pre-penalty notice the place to argue the level: the level and amount in that notice will generally not be increased in the penalty notice, and CBP needs a new pre-penalty notice to raise the level unless less than 9 months remain on the limitation period.

Fraud cases start at domestic value. Appendix B (E)(1)(b)(i) says a fraud claim will ordinarily be proposed at the domestic value of the merchandise, here $3,000,000, with exceptions where the domestic value is disproportionate to the duty loss. The 5 to 8 times range applies at disposition. A disposition above 8 times is allowed for egregious violations, public health and safety violations or where aggravating factors are present, still capped at domestic value.

The serious-case ceiling. For negligence and gross negligence, Appendix B (E)(1)(b)(ii) says penalties at the ceilings may be appropriate in serious cases, for example a high loss of duty or significant evasion of import restrictions. The proposed amount takes account of the gravity of the offense, the loss, the extent of wrongdoing and the mitigating and aggravating factors.

In every row, the duty is owed on top. Section 1592(d) requires CBP to restore lost duties whether or not a penalty is assessed, and Appendix B conditions any mitigated penalty on payment of the actual loss and a release stating the decision is full accord and satisfaction. On these lines that is the $50,000 actual loss, with the $30,000 potential loss collected when entries 3 and 4 liquidate. What the same reclassification costs in duty, interest and fees across a stacked rate, before any penalty, is worked on what a misclassification costs on past entries.

What does a valid prior disclosure change on the same lines?

Section 1592(c)(4) replaces the ceilings when the importer disclosed the circumstances of the violation before, or without knowledge of, the start of a formal investigation, and tenders the unpaid duties at disclosure or within 30 days of CBP's calculation. 19 CFR 162.73(b) and Appendix B (F)(2)(f) set the dispositions.

The interest is computed at the rate under 26 U.S.C. 6621 that CBP publishes each quarter, and the same notice says customs interest follows 26 U.S.C. 6621 and 6622, so it compounds daily. The notice at 91 FR 60141 shows 7 percent for underpayments from January 1, 2025 to March 31, 2026, 6 percent from April 1 to June 30, 2026 and 7 percent from July 1, 2026. On entry 1, $30,000 from November 14, 2025 to a tender on November 20, 2026 (371 days across three rate periods) comes to about $2,132 compounded daily, or $2,060 as simple interest. On entry 2, $20,000 from March 13, 2026 comes to about $938, or $917 simple. CBP's written calculation is the figure that counts; these are estimates to size the decision.

Set against the table above, a disclosed negligence case on these lines costs about $3,070 plus the $80,000 of duty. The same case undisclosed sits in a range of $40,000 to $160,000 plus the duty, and a gross negligence finding starts at $200,000. Entries 3 and 4, caught before liquidation, carry no disclosure penalty at all in a negligence or gross negligence case: they are corrected and paid through the entry itself.

Two limits. The disclosure protects only what it discloses: 19 CFR 162.74(h) treats any additional violation CBP finds while verifying a disclosure as if an investigation had already begun. And the timing test is strict: under 162.74(i)(1)(iv), once CBP issues a pre-penalty notice relating to a type of violation, you are presumed to know of the investigation. Prior disclosure after you find an underpayment covers how to scope and time one.

Which factors move the penalty inside its range?

Appendix B (G) lists the mitigating factors CBP considers, and (H) the aggravating ones. Each counts only if the case record sufficiently establishes it, and neither list is exhaustive. Aggravating factors cannot raise the culpability level; they offset mitigating ones.

The aggravating factors in (H) are obstructing an investigation or audit, withholding evidence, giving misleading information, prior substantive 1592 violations with a final administrative finding of culpability, illegal textile transshipment, a motive to evade a prohibition or restriction, and failing to comply with a lawful demand for records or a summons.

The Customs knowledge factor is the only one with its own ceiling. Suppose CBP had actual knowledge of this classification issue from January 1, 2026 and did not inform the importer. Entries 3 and 4, made after that date, would be capped at one times their loss in a negligence case, $30,000, or two times in a gross negligence case, $60,000 (Appendix B (G)(7)). The factor does not apply when a substantial delay in the investigation is the importer's doing.

Appendix B (N) adds one more route that sits outside the factors: under appropriate circumstances CBP may waive a 1592 penalty for a business that qualifies as a small entity, under the procedures in T.D. 97-46 (62 FR 30378, June 3, 1997), which implement the Small Business Regulatory Enforcement Fairness Act of 1996.

Factors (1), (3) and (5) depend on records that existed before CBP asked: written advice, dated corrections, a history of clean entries. Reasonable care for importers covers what those records look like.

What if the error did not affect the duty?

Some violations change no duty: a wrong country of origin on goods whose rate does not depend on origin, a misdescription that hides a restriction, a missing other-agency declaration. These are non-duty-loss violations under Appendix B (D)(2), and they are measured on dutiable value.

On the same $2,000,000 of goods, with a domestic value of $3,000,000:

The non-duty-loss figures here are larger than the duty-loss figures for the same goods, because 20 percent of the value is more than two times a 4-point rate difference. An origin or admissibility error with no duty effect is not a minor one. With a valid prior disclosure, a negligent or grossly negligent non-duty-loss violation carries no monetary penalty, and a fraudulent one carries 10 percent of dutiable value (Appendix B (F)(2)(f)).

At the other end, Appendix B (E)(1)(c) allows a fixed penalty for technical violations where the loss is nonexistent or minimal and the effect on enforcement is insignificant: generally $1,000 to $2,000 where there are no prior violations of the same kind, and $2,000 to $10,000 for multiple or repeated violations. Fixed amounts are not mitigated further.

And there is no violation at all, under 1592(a)(2) and 19 CFR 162.73(c), where the falsity is due solely to clerical error or mistake of fact that is not part of a pattern of negligent conduct.

Where does interest come in?

Interest appears three ways in a 1592 case, and they are easy to confuse.

1. As the penalty itself, after a prior disclosure in a negligence or gross negligence case: interest on the actual loss from liquidation (1592(c)(4)(B)) to the date of tender (Appendix B (F)(2)(f)).
2. On underpaid duty on an open entry: under 19 U.S.C. 1505(c), interest on an underpayment accrues from the date the deposit was due to the date of liquidation or reliquidation. In the example, entries 3 and 4 carry it when they liquidate.
3. On a bill not paid on time: under 1505(d), amounts not paid within the period after liquidation become delinquent and bear interest by 30-day periods from liquidation until paid.

All three use the quarterly rate CBP publishes under 26 U.S.C. 6621. The notice at 91 FR 60141 shows 7 percent for underpayments for the quarter from October 1, 2026. Check the notice for each period the interest covers.

Is the 50 percent floor in the June 2026 executive order in force?

Executive Order 14411, Strengthening Customs Enforcement, was signed on June 3, 2026 and published at 91 FR 35125 on June 10, 2026. Section 4(c) directs the Secretary of Homeland Security, within 90 days, to revise all mitigation standards, including a minimum penalty floor of not less than 50 percent of the assessed penalty absent exceptional national security circumstances, a minimum liquidated damages floor, and an end to mitigation for repeat offenders. Section 12(c) says the order creates no right or benefit enforceable by any party.

As of November 7, 2026:

• The eCFR text of Appendix B, current to November 5, 2026, still carries the ranges used on this page.
• A search of the Federal Register for documents amending 19 CFR part 171 published from June 1 to November 7, 2026 finds one: the interim final rule at 91 FR 69977, published November 6, 2026 and effective January 5, 2027. It rewrites paragraph (K) so that a customs broker who violates Section 1592 may, at CBP's discretion, be penalized under Section 1592 or face any other enforcement action, including under 19 U.S.C. 1641. Until then, (K) limits 1592 penalties against brokers to fraud or cases where the broker shared in the benefits of the violation beyond customary fees. The importer dispositions in (F)(2) are not touched.
• No rule implementing the 50 percent floor has been published.

For the worked example this page uses only the Appendix B text in force on November 7, 2026. The disclosed-case figures above would not move under any guideline revision, because the disclosure limits sit in 19 U.S.C. 1592(c)(4) itself. The undisclosed ranges would move only when CBP publishes a rule that says how.

How do the petitions change the figure once a penalty is assessed?

The petition, its 60-day clock and the supplemental petition are set out step by step on what to do with a CBP pre-penalty notice. Two points bear on the numbers. The petition is where the Appendix B factors are argued, and the decision states the mitigated amount with findings of fact and conclusions of law (19 CFR 171.21). And the multiple is tied to the loss of duties, so 19 CFR 171.61 lets a supplemental petition be filed within 60 days of any later administrative or judicial decision on the entries that lowers the loss the mitigated amount was based on. If a protest or a court case later wins on the classification behind the penalty, the penalty figure can be revisited too.

How can you size your own exposure before CBP does?

The worked example is the calculation counsel will run on your lines. You can run it first, from the same data, for the decisions only you can make: whether to disclose, how far back, and what to pay through the entry while it is still open.

1. Run a line-level audit of the last five years of entries, the limitation period under 19 U.S.C. 1621. The post-entry audit pillar covers the checks on each line.
2. For every underpaid line, compute the loss including fees, and mark actual or potential by liquidation status.
3. Group the lines by cause, since each cause is one potential violation with its own culpability question.
4. Compute the ceiling and the Appendix B range for negligence on each group, and the prior disclosure cost, which is interest on the actual loss.
5. Take that table to counsel. The comparison between the disclosed and undisclosed figures is usually the whole argument.

TariffSense reads broker entry exports and entry summaries in any layout and flags each line where the declared duty differs from what the measures in force on the entry date required, in both directions, with the entry date, line number and liquidation data attached, which is the input to step 2. The post-entry audit page shows what goes in and what comes back, and the duty calculator shows the rate that applied on a given date. Overpayments found in the same review are refund claims, not offsets, except in the audit setting described in 19 U.S.C. 1509(b)(6)(A).