When you are importing merchandise into the United States, you must provide a security guarantee that you will comply with the country’s rules and regulations. Insufficient customs bonds can be the import deal breaker when attempting to import your goods across the country’s borders. Follow our guide to learn everything you need to know to avoid insufficient customs bonds.
A customs bond is a contractual agreement between U.S. Customs and Border Protection (CBP), the importer of record and the surety company. A customs bond ensures the CBP will be paid the duty and taxes owed to them and the importer will adhere to the rules and regulations of the CBP.
When you are importing merchandise into the U.S. for commercial purposes with a value of more than $2,500, you must post a customs bond to make sure all duties, taxes, and fees due to the federal government are paid.
Importers and warehouse/facility operators should obtain custom bonds to secure shipments and make sure warehouse facilities are bonded.
Custom bonds can be obtained through sureties licensed by the U.S. Treasury Department. Review a list of custom bonds to learn more. Click on the “Request a Quote” link to get a quote for a Customs Bond.
Customs Bonds start at a minimum $50,000. If the duty, taxes and fees you pay are high, Customs may require a higher bond. Review the parameters for setting custom bond amounts.
What’s next, you might ask? Figure out the difference between single entry and continuous bonds.
A single entry bond can be used if you are completing one transaction and if you import goods only occasionally.
A continuous bond is much more cost effective and should be used if you import on a regular basis through various ports of entry.
So how do those bonds become insufficient? Read on.
A customs bond is deemed insufficient if an importer is paying more in duty, taxes and fees than the current bond is written to cover.
The current trade war with China and the increased duties associated with it are exhausting the bond coverage of many Customs bonds.
For example, a bond is calculated at 10 percent of the total duty, taxes and fees paid annually. If the imported duty, taxes and fees exceed 10 percent, then you have an insufficient customs bond. An insufficient bond cannot be used for entries any longer, which means your shipments can’t be cleared and will be held at the port location until a new sufficient bond is filed and issues are addressed. Continuous bonds are typically the bonds that are deemed insufficient.
We outline the reasons for insufficient customs bonds below.
Continuous bonds are rendered insufficient for the following reasons:
Importers should also realize that insufficient bond warning notice is not required. Continuous bonds can be labeled insufficient without any advance notice to importers.
Insufficient customs bonds will not be returned to sufficient status until all issues with the bonds are addressed with the U.S. Revenue Division. You can address insufficient bond issues by calling your Customs Broker or emailing email@example.com.
When a bond is deemed insufficient, the bond needs to be terminated, a process that takes at least 15 days. Bonds are not returned to sufficient status until all issues outlined by the Revenue Division are resolved.
So how do you avoid insufficient bonds? We have you covered.
The following tips can help you prevent bond insufficiency:
If continuous bonds are kept in use by importers without resolving the insufficient issues outlined by the Revenue Division, the following actions may be taken:
Licensed Customs Brokers can help you avoid the hassles of insufficient bonds.
If you utilize the services of a Licensed Customs Broker, a bond can complete and secure a transaction. Customs brokers can also help you avoid the hassle of insufficient customs bonds.
Connect with a customs broker that has the experience you need to handle the details and make importing easier on you. Customs Brokers can also help you increase bond amounts and update contact information to avoid insufficient bond hurdles.