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Reconciliation Test Amended to Ease Requirements, Transition to ACE

Friday, December 16, 2016
Sandler, Travis & Rosenberg Trade Report

U.S. Customs and Border Protection is transitioning its ongoing reconciliation test to the Automated Commercial Environment and making a number other changes as of Jan. 14.

Reconciliation allows an importer to identify undeterminable information (other than that affecting admissibility) at the time an entry summary is filed and provide that information at a later date. The importer identifies the outstanding information by means of an electronic flag placed on the entry summary at the time it is filed and payment (applicable duties, taxes, and fees) is made. Issues for which an entry summary may be flagged for reconciliation relate to value issues other than claims based on latent manufacturing defects, classification issues (on a limited basis), issues concerning value aspects of entries filed under HTSUS heading 9802, and issues concerning post-importation claims under 19 USC 1520(d) for preferential tariff treatment for goods entered under many free trade agreements.

Transition to ACE. All reconciliation entries will have to be filed in ACE regardless of whether (a) the underlying entry was filed in ACE or the Automated Commercial System and (b) it is a replacement, substitution, or follow-up to a reconciliation entry originally filed in ACS.

Filing Location. Reconciliation entries may be filed at any CBP port, eliminating the requirement to file at specified reconciliation processing ports. However, CBP reminds importers and customs brokers that the filing of a reconciliation entry is considered customs business, meaning that a broker wishing to file a reconciliation entry must have a district or national permit authorizing it to file at the port where the reconciliation entry is filed.

Participation. CBP will open the reconciliation test to all importers without any need for application or acceptance. However, importers wishing to participate will still be required to have a continuous bond on file with CBP with the required reconciliation bond rider.

The only importers who may not participate are those who have been suspended from participation. Any suspended party will not be allowed to flag entries until the suspension period ends and reinstatement is applied for and granted. Suspended importers are still required to file reconciliation entries timely during the suspension period for underlying entries flagged prior to the suspension becoming effective.

Blanket Flagging. CBP is streamlining the process for blanket flagging underlying entries for reconciliation. Prior to these changes, importers requested that CBP input and apply a blanket flag for specified issues to all underlying entries filed by the importer for a specific time period. Effective Jan. 14, importers will no longer will submit such requests to CBP and instead may input and apply a blanket flag themselves. However, Tom Gould, senior director, customs and international trade, for Sandler, Travis & Rosenberg, said this will only be possible if the importer is a self-filer.

Gould also noted that this type of blanket flagging is different from the type in which importers request that their brokers blanket flag their entries. CBP previously said that such blanket flagging would no longer be allowed once the reconciliation test moved to ACE, meaning all reconciliation flagging would have to be done on an entry-by-entry basis. However, CBP’s notice does not appear to eliminate this option.

Retroactive Flagging. All test participants may request that CBP retroactively flag underlying entries on their behalf. The request must be made at least 60 days before the scheduled liquidation date of the underlying entry. CBP’s decision to grant or deny such a request is entirely discretionary and cannot be appealed. CBP intends to grant these requests sparingly and only as a courtesy where appropriate.

Filing Process. Reconciliation entries filed in ACE will be fully automated and all required data and information must be transmitted electronically on the reconciliation entry, which must continue to be filed using the Automated Broker Interface. Paper and compact disc spreadsheets will no longer be accepted.

Information Requirements. Reconciliation entries with no changes to flagged entries must only report the flagged underlying entry numbers (no line item data) and must be filed as an aggregate reconciliation entry; i.e., no entry-by-entry reconciliation entry will be allowed when there are no changes to declare.

Reconciliation entries with changes to the flagged entries will only have to report the newly determined transaction value and the newly reconciled duties, fees, and taxes (i.e., the original amounts will no longer have to be declared).

Reconciliation entries claiming preferential tariff treatment pursuant to a free trade agreement

post-importation claim must include electronic certifications of the required statements and declarations.

Reconciliation entries reconciling classification issues must provide information indicating the protest, administrative ruling, or court action that necessitates reconciling the classification of the underlying flagged entry.

Reconciliation entries flagged only for a value change must indicate by checking a checkbox if the value change results in a classification change as well.

Reconciliation entry filers must check a checkbox indicating if a prior disclosure has been made on any of the flagged underlying entries.

The reconciliation entry line item data must include the line number of the underlying flagged entry being reconciled.

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