Reasonable care for importers: how to show it from the entries you already filed

Where does the reasonable care duty come from?

The duty is in 19 U.S.C. 1484(a)(1). One of the parties that qualifies as importer of record, in person or through an agent authorized in writing, "shall, using reasonable care" do two things: make entry, by filing what CBP needs to decide whether the goods may be released, and complete entry, by filing the declared value, classification and rate of duty and any other information CBP needs to assess duties, collect accurate statistics and decide whether any other legal requirement is met.

The wording came in with the Customs Modernization Act, Title VI of the North American Free Trade Agreement Implementation Act (Pub. L. 103-182), effective December 8, 1993. CBP's Reasonable Care publication describes the bargain the Act made: "informed compliance" and "shared responsibility". CBP tells the trade what the law requires; the importer declares the value, classification and rate using reasonable care; and CBP then fixes the final classification and value. An importer that fails to use reasonable care, the publication says, can see release delayed and, in some cases, penalties or referral for criminal enforcement.

The statute never defines the term. The closest thing to a definition is in CBP's penalty guidelines, 19 CFR part 171, Appendix B. Paragraph (C)(1) defines a negligent violation as one resulting from a failure to exercise the reasonable care and competence expected of a person in the same circumstances, in finding the facts, in drawing inferences from them, in understanding the statutory obligations, or in communicating information so the recipient can understand it. Paragraph (D)(6) lists the responsibilities the general standard covers: providing a classification and value, giving CBP enough information to determine the final classification and value, taking measures that lead to accurate documentation, and determining whether the legal requirements are met.

What happens when reasonable care is missing?

The consequence is a penalty under 19 U.S.C. 1592. A material false statement or omission on an entry made through negligence is a violation, and Appendix B treats negligence as the failure of reasonable care. Two parts of the law make the evidence of care decisive.

The burden of proof. In a 1592 case at the Court of International Trade, where every issue is tried de novo, a negligence charge requires the United States to prove the act or omission, and then the importer must prove that it did not result from negligence (1592(e)(4)). The importer's records of how each declaration was made are the evidence for that.

What CBP counts as a lapse. Appendix B (D)(6) names two examples: failing to follow a binding ruling may be considered a lack of reasonable care, and an unreasonable classification will be (its example is snow skis classified as water skis). Appendix B (A) adds that the unintentional repetition of a clerical mistake over a significant period or many entries could indicate a pattern of negligent conduct and a failure to exercise reasonable care, even though a single clerical error is not a violation.

The ceilings and ranges that follow from a negligence finding, and how much higher a gross negligence finding sits, are worked on how CBP sizes a Section 1592 penalty.

Why will CBP not give you a checklist?

CBP's publication says so directly: the facts of every import transaction differ, so neither CBP nor the importing community can develop a foolproof reasonable care checklist. It offers questions instead, which in CBP's view "may prompt or suggest a program, framework or methodology", and it says the information has no legal, binding or precedential effect. It also warns that relying solely on its general information may not be considered reasonable care.

The September 2017 edition, the current one on CBP's site, is organized as follows:

Each topic opens with a basic question. For classification, it is whether you know what you ordered, where it was made, how it was made and what it is made of. For valuation, whether you know the price actually paid or payable, the terms of sale, any rebates or other payments, whether assists, commissions or royalties were paid, and whether you and the seller are related.

Which Form 7501 fields does each question point at?

Most of the publication's questions can be answered in two ways: with a procedure ("we have a classification review step") or with the entries themselves ("every entry of this part number in five years carries the same HTS number and the ruling cited"). The second answer is stronger evidence, because it shows the procedure worked. Here are the questions mapped to the fields where the answer shows.

The Form 7501 field-by-field guide explains every block and column named here. The forced labor and intellectual property questions are mostly answered outside the 7501, in supplier due diligence and contracts, but the origin and MID fields are where those answers have to be consistent with what was declared.

Classification and origin now carry more weight than the general rate on the line. On many entries they also decide which Chapter 99 lines apply under Section 232, Section 301 or IEEPA, each on its own dates. Why your entry shows the wrong duty stack explains how those layers are declared, and the duty calculator shows which applied on a given entry date.

What does a self-audit record that shows reasonable care look like?

A review that leaves no record is hard to use as evidence. The record does not need to be elaborate; it needs to show that the review happened, what it found and what was done about it. One review, written down:

Kept month after month, these records build the history Appendix B rewards. Its mitigating factors include immediate remedial action, meaning payment of the actual loss before a penalty notice and within 30 days after CBP gives you the amount, or substantial correction of the organizational or procedural defect right after learning of the violation, and a prior good record, a consistent pattern of importations without a 1592 violation (Appendix B (G)(3) and (G)(5)). Each counts only if the case record establishes it, which means the records have to exist before CBP asks. Contributory Customs error under (G)(1) needs written CBP advice or a contemporaneous CBP record, so keep every written answer CBP gives you with the entries it concerns.

The record also has a rule attached. Appendix B (C)(2) defines gross negligence as acting with actual knowledge of or wanton disregard for the relevant facts. A finding of underpayment that sits in a review file and is never corrected or disclosed is exactly that kind of knowledge. Underpaid lines on open entries are corrected by post-summary correction; on liquidated entries, prior disclosure is the route that caps the penalty. Overpaid lines are refund claims by correction or protest, with the clocks on how long you have to fix a past entry.

Keep the review records at least as long as the entries they cover: 19 CFR 163.4(a) sets five years from each entry date, and 19 U.S.C. 1621 gives CBP five years from the violation to bring a 1592 case.

Does a customs broker carry the duty for you?

No. 1484(a)(1) lets the importer of record act through an agent authorized in writing, and 1484(a)(2)(B) lets a licensed broker file when the owner, purchaser or consignee designates one. The duty to use reasonable care stays with the importer of record. CBP's publication turns that into questions: whether you discussed the importations with your expert in advance and gave full, complete and accurate information, whether you follow the advice and keep a written record of it, and whether a responsible person reviews what the broker prepared and makes sure CBP is told of needed corrections.

Two consequences for the self-audit. First, the broker's entry export is the best evidence of what was actually declared, so ask for it routinely and review it against your own records rather than waiting for a problem. Second, the questions you asked the broker and the answers you got are part of your reasonable care record; keep them with the product they concern.

What should you do next on your own entries?

1. Pull the broker's entry export for the last five years and group the lines by part number. Every part declared under more than one HTS number, origin or value basis is a question to answer in writing.
2. Run the line checks in the post-entry audit pillar on every line, in both directions.
3. Write the review down in the shape of the table above, with an action against every finding.
4. File corrections, protests and any prior disclosure inside their windows, and record the procedure change behind each cause.
5. Repeat on a fixed schedule, monthly or quarterly, so the next review starts where the last ended.

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 and line number attached. Those findings are the input to the review record; the decisions on each one stay with the importer, its broker and counsel. The post-entry audit page shows what goes in and what comes back. If CBP has already asked about a line, read CF-28 and CF-29: how to audit yourself before CBP asks; if an audit letter has arrived, the focused assessment guide.