Prior disclosure after you find an underpayment: scoping it from your own entry export

Why does an audit that finds refunds also find exposure?

A post-entry audit tests every line of every Form 7501 against the invoice, the packing list and the measures in force on the entry date. The test does not know which way the error runs. A line classified at a lower rate than the goods deserve, a Chapter 99 duty that should have been declared and was not, a country of origin that does not support the trade-agreement rate claimed, an assist or royalty left out of the value: each is an underpayment, and each shows up in the same pass that finds the overpayments.

Overpayments go to a refund route, which how to recover overpaid import duty walks through. Underpayments go the other way, and the law is clear about where. Under 19 U.S.C. 1592(d), CBP must require that lawful duties be restored whether or not a penalty is assessed. The only question an importer controls is how large the penalty is, and that depends on whether CBP hears about the error from the importer first.

This page covers the US route, the prior disclosure under 19 CFR 162.74. The Canadian equivalent, a correction under section 32.2 of the Customs Act, is on correcting a Canadian entry.

What does a prior disclosure change?

19 CFR 162.73 sets the penalty ceilings for a Section 1592 violation, and the difference a disclosure makes is in the table.

Two things the table does not do. It does not forgive the duties: the lost amount is tendered in full under 162.74(c), and interest on it is what remains of the penalty. And it does not reach violations the disclosure did not cover. Under 162.74(h), any additional violation CBP finds while verifying the disclosure is treated as if a formal investigation had already begun, so it gets no disclosure treatment at all. The scope of the disclosure is therefore the decision that matters most, and it is decided from data.

Interest is also where the rate comes from. 162.73(b)(2) computes it from the date of liquidation at the rate under 26 U.S.C. 6621. CBP publishes that rate every quarter in the Federal Register; the notice for the quarter beginning October 1, 2026 set it at 7 percent for underpayments, and the same table shows 6 percent for the quarter from April 1 to June 30, 2026 (91 FR 60141).

What must the disclosure contain under 19 CFR 162.74?

The regulation defines "discloses the circumstances of a violation" in paragraph (b), and every item on the list is a field or a derivation from the entry export:

1. The class or kind of merchandise involved. In practice, the product or product group, with the HTS numbers declared and the HTS numbers that should have been declared.
2. The entries, identified by entry number, or by port of entry and approximate dates where the numbers are not yet known.
3. The material false statements, omissions or acts, with an explanation of how and when they occurred. This is the narrative: which box on the 7501 was wrong, why, and since when.
4. The true and accurate information that should have been declared, to the best of the discloser's knowledge, with a statement that anything unknown will follow within 30 days. Extensions of the 30 days can be requested from the Fines, Penalties and Forfeitures Officer.

Three procedural points sit around that list. A disclosure can be oral, but it must be confirmed in writing within 10 days (162.74(a)(2)). A written disclosure is addressed to the Commissioner, marked "prior disclosure" on the envelope and presented at the port of the disclosed violation; where several ports are involved, copies go to each concerned Fines, Penalties and Forfeitures Officer, or the disclosure names every port so CBP can consolidate (162.74(e)). And the effective date is the date of mailing if sent by registered or certified mail with return receipt, otherwise the date CBP receives it (162.74(d)). That date is what is compared against the date CBP recorded in writing as the start of its own investigation, which is how 162.74(g) defines commencement.

How do you scope the disclosure from an entry export?

Start from the audit output, not from memory. A line-level audit of the last five years of entries, the retention period under 19 CFR 163.4 and the limitation period under 19 U.S.C. 1621, gives you every line where the declared duty was lower than the duty the law required on that entry date. The scoping work is to turn that list into the four items above and a tender figure.

1. Group the findings by cause. Each cause is one "circumstance" in the regulation's sense: the same product family under the wrong HTS number, the same supplier's goods claimed under a trade-agreement rate without a valid certification, the same Chapter 99 heading missed across a date range. A disclosure can cover several causes, but each must be described, and 162.74(h) means a cause you leave out is unprotected.
2. List every entry and line each cause touches. Entry number, entry date, port, line number, the HTS number declared and the correct one, the declared value and the correct value, the rate that applied on the entry date and the duty declared. The post-entry audit pillar covers what those checks look like line by line; the duty calculator shows the rate that applied on a given date.
3. Split the entries by liquidation status. 19 CFR 162.71 distinguishes the actual loss of duties, on entries where liquidation has become final, from the potential loss on entries where it has not. The tender under 162.74(c) is of the actual loss. Entries that are still unliquidated are corrected and paid through the entry itself: a post-summary correction with payment of the increase, which CBP's PSC test notice allows until 300 days after entry or 15 days before the scheduled liquidation, whichever comes first (91 FR 41053). Entries that have liquidated but are still inside the 180-day protest period are not yet final; they belong in the disclosure, and CBP's written calculation tells you how they are collected. How long do you have to fix a past entry has the clocks.
4. Compute the duty gap per line, then the interest. The gap is the correct duty less the duty declared, including the Chapter 99 duties and the merchandise processing fee where the value changed. Interest on finally liquidated entries runs from the liquidation date at the quarterly 6621 rate. On unliquidated entries corrected by PSC, the PSC notice says interest is not accepted with the payment and is assessed at liquidation, where 19 U.S.C. 1505(c) runs it from the date the deposit was due.
5. Write the narrative from the data. How the error arose (a classification database entry made on a date, a broker instruction, a supplier's origin declaration), when it started, when it stopped or whether it is still running. If some entries are not yet identified, say so and use the 30-day supplement.

Here is an illustrative scope for one cause. A product family was declared under an HTS number carrying a 2.5 percent general rate when the correct number carried 6.5 percent on every entry date in the range. The review found eight entries, one affected line each, with an entered value of $40,000 per line, so the duty gap is $1,600 per line. The disclosure is being prepared for mailing on November 20, 2026.

For entry 2, interest from January 16, 2026 to November 20, 2026 at the published rates, 7 percent for the first quarter, 6 percent for the second and 7 percent from July 1, is roughly $90 on $1,600 of lost duty if computed as simple interest. CBP's written calculation is the figure that counts, and the tender of any difference is due within 30 days of it (162.74(c)). The total at stake in this example is $12,800 of duty plus interest, against a negligence ceiling without disclosure of $25,600.

Dates in the table are illustrative; the liquidation dates in your own case come from the posted notices in ACE, which how to check entry liquidation status explains how to pull across a whole export.

How do you sequence the disclosure against refund claims?

The same audit that produced the table above usually produces overpayments on other lines, sometimes on the same entries. Keep three rules apart.

The refund claims are separate filings. An overpayment on an unliquidated entry is corrected by PSC; on a liquidated entry it is protested within 180 days under 19 CFR 174.12(e). Neither filing is a disclosure, and a disclosure does not file either of them. CBP's PSC test notice also makes a PSC unavailable on an entry that is associated with a protest or under CBP review (91 FR 41053).

One entry, one PSC. Where an unliquidated entry carries both an underpaid line and an overpaid line, a single PSC replaces the whole entry summary, so the corrected summary carries both changes and the net is settled at liquidation. Entry 7 above would be filed that way if it also had an overpaid line.

The tender is not netted against refunds. 162.74(c) requires tender of the actual loss on the disclosed entries. Refunds on other entries arrive on their own timetable, with interest under 19 U.S.C. 1505(c) from the date of deposit. The only netting the law provides is in 19 U.S.C. 1509(b), where overpayments identified during a CBP audit may offset underpayments on finally liquidated entries in calculating the loss under Section 1592, and that provision is written for CBP's audits rather than for a disclosure. Whether it can help in a particular case is a question for counsel.

The order that follows from those rules: file the disclosure first, because its effective date is what the timing test compares against and nothing you file afterwards changes it; file the PSCs on the unliquidated entries next, with payment where the duty went up; file the protests on liquidated overpayments before their 180 days run, since a protest is not held back by the disclosure. Filing a protest first on an entry that also carries an underpayment is the one sequence to avoid, because it closes the PSC route on that entry and raises the question in a document you did not write for the purpose.

What happens after CBP receives the disclosure?

Under 162.74(f), the receiving officer notifies the Office of Investigations, which verifies the disclosure. You can ask in the disclosure that verification be held until the 30-day supplement is in, and the Fines, Penalties and Forfeitures Officer may grant or refuse that. CBP then calculates the actual loss and notifies you in writing; if you did not tender at filing, the tender is due within 30 days of that notice, with extensions for good cause. Where CBP's calculated loss exceeds $100,000 and more than a year remains under the statute of limitations, 162.74(c) allows a request for Headquarters review of classification, rate, value or special-program questions, provided the amount is deposited first; the decision is final and you waive the right to contest the figure elsewhere.

Failure to tender the finally calculated loss results in denial of the disclosure. If CBP denies disclosure treatment because it had already commenced an investigation and then starts a penalty case, 162.74(g) requires the prepenalty notice to attach the writing that evidences when the investigation began. That is the document that decides the timing dispute, and it is why the date of your own filing should be fixed by certified mail or a receipt.

Deadlines and the tender figure in a real case should be confirmed with a licensed customs broker or trade counsel, who will also judge the culpability level the facts support.

How does this fit a standing audit?

A monthly line-level audit changes the disclosure question from "how far back" to "which month". Entries audited while their PSC window is open are corrected and paid through the entry, so the disclosure covers only the entries that slipped past liquidation before the review caught them. TariffSense reads broker entry exports and entry summaries in any layout and flags each line where the declared duty differs from the duty the measures in force on the entry date required, in both directions, with the entry date, line number and liquidation data attached. The post-entry audit page shows what goes in and what comes back. The findings are the input to the scoping steps above; the disclosure letter, the PSCs and the protests remain filings for the importer, its broker and counsel.

What should you do next on your own entries?

Pull five years of entries from your broker's export and run the line checks in the post-entry audit pillar. Sort the underpaid lines by cause, then by liquidation status, and compute the duty gap for each. Take that table, not a summary of it, to counsel: the decision whether to disclose, and how widely, is made from the same rows the disclosure will have to list. If a CBP request for information has already arrived on any of those lines, read CF-28 and CF-29: how to audit yourself before CBP asks first.