Customs Modifies Reconciliation Procedures

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March 2001

In the March 13, 2001 Federal Register, the U.S. Customs Service published a notice announcing several important changes to the reconciliation process. As a background note, reconciliation is the process that allows importers to flag undeterminable information at the time an entry is filed, in order to provide that information at a later date. It should be noted that only certain types of information can be flagged for reconciliation, including value issues, very limited classification issues, certain 9802 issues, and NAFTA issues. The means of filing the information at a later date is through the use of a reconciliation entry. Reconciliation entries fall into one of two types: 1) Aggregate reconciliation entries and 2) Entry-by-entry reconciliation entries. It is important to know the differences between these two types of reconciliation entries, as certain procedures are only applicable to one or the other of the types.

The changes announced in the March 13 Federal Register notice include a reduction of data required for "no-change" aggregate reconciliation entries, a new fee requirement for providing reports of flagged entries, a modification of the liquidated damages provision, and a new diskette labeling procedure. Each of these changes is briefly outlined below.

Reduced Data Requirements for No-Change Aggregate Reconciliation Entries

An aggregate reconciliation entry contains a list of the underlying entry summaries affected and the aggregate revenue adjustment relative to those listed entry summaries. Until the recent change, Customs required an importer flagging entries for reconciliation to provide Customs with the original duty, tax, and fee information, both on the original entry summary and the reconciliation entry. In order to simplify the process, however, Customs has determined that duty, tax, and fee information need not be submitted with the reconciliation entry. It should be noted, however, that transmission of the Association File is still required and this feature is available ONLY for aggregate reconciliations.

Fee Requirement for Printed Reports of Flagged Entries

To assist importers with the tracking and timely reconciliation of flagged entries, Customs has been providing importers with reports of their flagged entries at no charge. However, Customs has now determined that it should be reimbursed for manpower and computer time spend downloading and compiling these reports. As a result, if an importer wishes to request a reconciliation report, a request must be submitted to the Accounting Services Division of Customs in Indianapolis, Indiana. The fees for this service vary according to the number of importer numbers and the number of fiscal years requested.

New Liquidated Damages Guidelines

There are five types of liquidated damages violations under the reconciliation prototype guidelines: 1) Reconciliation No File; 2) Reconciliation Money No File; 3) Reconciliation Late File; 4) Reconciliation Money Late File; and 5) Reconciliation Late File With Money No File. The guidelines (published in the Federal Register on February 29, 1999) set forth the assessed liquidated damages amounts for each violation type and provide a mitigation amount for each violation. If the mitigation amount ("option 1") is chosen, the importer waives the right to further mitigate the claim below that amount. The new guidelines set forth descriptions of each violation type and the option 1 mitigation amount for each.

New Diskette Labeling Procedure

Customs is continuing to require that the ABI-transmitted Header and Association File be submitted by both hard copy and commercial spreadsheet format on a diskette. However, beginning on the date of the above-referenced Federal Register notice (March 13, 2001) importers must label the required diskettes with the reconciliation entry number, importer of record number, and the calendar year or years covered by the reconciliation spreadsheet contained on that diskette. These labeling requirements have been mandated by the Bureau of the Census.

For more complete information, view the Federal Register notice referenced above.