CBP Finds 'Customs Compliance Services' to be Outside Customs Business

Post-entry audits of customs filings remain outside of "customs business" and therefore don't require broker licensing, said Myles Harmon, director-commercial and trade facilitation at CBP, in ruling HQ114654. The ruling was in response to a request from Koot & Associates, which asked for CBP input on the legal status of a new subsidiary providing "customs compliance services." The company asked CBP whether employees of the new offices, who will work to identify errors in entry documents using post-entry audit software, are performing "customs business."

(Customs business is defined in 19 CFR 111.1 as: "those activities involving transactions with CBP concerning the entry and admissibility of merchandise, its classification and valuation, the payment of duties, taxes, or other charges assessed or collected by CBP on merchandise by reason of its importation, and the refund, rebate, or drawback of those duties, taxes, or other charges. “Customs business” also includes the preparation, and activities relating to the preparation, of documents in any format and the electronic transmission of documents and parts of documents intended to be filed with CBP in furtherance of any other customs business activity, whether or not signed or filed by the preparer. However, “customs business” does not include the mere electronic transmission of data received for transmission to CBP and does not include a corporate compliance activity.")

CBP found that because the company will be reviewing the documents filed with CBP for problems rather than preparing documents for filing with CBP, the audits are outside the "customs business' definition. The new company also won't be making decisions on classification, value or admissibility of merchandise and won't resolve discrepancies or irregularities, said CBP. If problem are found, the company will send issues to licensed customs brokers at the parent company, who will then work to solve the inaccuracies, said CBP.

Because the subsidiary "will not prepare documents for filing with CBP or engage in activities leading to the filing of such documents, the identification of discrepancies between entry documents filed with CBP and clients' records is not customs business," said CBP. "Accordingly, the employees' activities in the proposed new offices are not subject to the laws and regulations applicable to customs brokers transacting customs business," the ruling said.