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Import Revenue Debt Collection Process Needs Improvement, Report Finds

Wednesday, December 12, 2018
Sandler, Travis & Rosenberg Trade Report

U.S. Customs and Border Protection failed to ensure the timely collection, write-off, and processing of delinquent debt from importers during fiscal years 2014 through 2016 and instead settled for collecting funds from importer surety bonds that yielded less than one percent of the amount owed, according to a recent report from the Department of Homeland Security’s Office of Inspector General.

The Tariff Act of 1930 requires CBP to collect all duties owed and the Debt Collection and Improvement Act of 1996 requires the agency to maximize its collections of delinquent debts owed to the government. These laws also require quick action to enforce the recovery of debts and the use of all appropriate collection tools.

However, the report finds that as of FY 2017 CBP had more than $4.3 billion in cumulative uncollectible duties, taxes, and fees, some dating back almost 40 years. During the period at issue, the report states, CBP only collected $247,000 from surety bonds and did not pursue collection or write-off of about $189 million of the remaining delinquent debt from 16 importers. CBP also lacks a process to document the receipt, processing, and collection of its referrals of debt collection cases to the agency’s Office of Chief Counsel, which during this period prevented the processing of more than $84 million of delinquent debt.

In light of these problems, the report recommends that CBP take the following steps.

- continue to develop and implement a risk-based bonding methodology for use on high-risk revenue imports (CBP said it is in the final stages of doing so)

- develop and implement a policy to ensure that viability analysis worksheets (which determine an importer’s ability to pay) are completed within a reasonable timeframe (CBP said it has finalized data elements on these worksheets to ensure standardized documentation of its collection efforts and is developing a policy and procedures document to address the entire debt collection process)

- develop and implement a plan to ensure that CBP only contracts with private collection agencies after ensuring that required viability analyses have been completed

- develop and implement a process or procedure to track and monitor referrals or write-offs (CBP said that in April 2018 it made available an internal site to perform this function)

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