Global Tax Adviser
February 2010

US Customs Information Requests – Best Chance to Avoid Penalties?

Joseph Brick
National Leader, Trade & Customs, Toronto

Canadian companies who act as importers of record into the United States should pay careful attention to requests for information from the US customs authorities. These companies may occasionally receive a "Request for Information" form (CBP 28 form), which is used by US Customs and Border Protection to request details about transactions. Often, these forms point out a potential error or omission that can be corrected without penalty by completing a timely "prior disclosure."

US law prohibits filing a prior disclosure after an investigation begins. By itself, a CBP 28 form does not generally constitute a formal investigation that would preclude the taxpayer from filing a prior disclosure. However, US Customs and Border Protection may deem it an investigation by stating so in the CBP 28 form. For example, US Customs and Border Protection has stated on some forms: “Due to the fact that this office is already reviewing your invalid claims, you are no longer eligible for the provisions set forth under 19 CFR 162.74” (i.e. filing a prior disclosure).

If you receive a CBP 28 form, you should take the matter seriously and investigate filing a prior disclosure to mitigate potential penalties. Further, an importer who is considering a disclosure should carefully review any CBP 28 forms that have been issued concerning the matter to determine whether the forms contain a statement that they cannot file a prior disclosure. Failure to investigate all CBP 28 forms can render the disclosure invalid.

This step is especially critical when a non-resident importer directs customs paperwork to its broker. KPMG is aware of several instances where the customs broker received the CBP 28 form and did not communicate the contents to the importer or overlooked the form altogether.

For more information, contact your KPMG Tax adviser.

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