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Drawback Compliance Program to be Tested in 2012

Thursday, December 01, 2011
Sandler, Travis & Rosenberg Trade Report

U.S. Customs and Border Protection is planning to run a year-long test of a Drawback Compliance Measurement program in fiscal year 2012. CBP states that the DCM program was developed in response to repeated audit findings by the Department of Homeland Security’s Office of Inspector General that drawback is a material weakness for CBP internal controls over financial reporting, particularly given the manual nature of drawback processing and the associated risk of erroneous drawback payments. By establishing a formal drawback measurement program CBP hopes to generate drawback compliance information based on a sound statistical methodology, as well as determine potential revenue loss, for a more comprehensive risk picture.

The sample pool for claims reviewed under DCM will consist of drawback claims that liquidated in the previous month. CBP explains that the evaluation of liquidated claims will enable it to fully assess compliance with drawback requirements since all the underlying import entries will be finalized. However, CBP also emphasizes that this program is not an audit and that DCM reviews will be conducted by a drawback specialist.

The DCM test may result in an increase in requests to drawback filers for constructed paperless entries. However, CBP does not believe that DCM reviews will be an additional burden for claimants in terms of substantiating documentation. CBP also notes that under DCM certain drawback claims may be reviewed by offices other than those at which they were filed.

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