New York Import Compliance: A Comprehensive Guide to CBP Audits

CBP audits can be initiated for several reasons, and understanding the type of audit you are facing is the first step in forming a strategic response. They can be routine or triggered by specific risk factors, such as high-risk commodities or previous compliance issues. Knowing the specific type of audit will help you focus your preparation efforts and anticipate the kinds of questions and documents the auditors will request.

• Routine Audits: Conducted as part of CBP's regular compliance verification program to ensure a broad range of companies are adhering to regulations.
• Focused Assessments: A comprehensive, risk-based audit of a company's internal controls and import compliance, often targeting specific high-risk areas identified by CBP.
• Quick Response Audits: A targeted audit on a specific issue or a narrow range of transactions, typically initiated when a potential problem is flagged through data analysis.
• Compliance Assessments: Reviews to identify and address compliance issues proactively, often initiated by CBP to help importers improve their internal processes.
• Enforcement Investigations: Initiated when there is suspicion of significant violations or fraudulent activity, these are the most serious and require immediate legal counsel.

Upon receiving a CBP notification, you should immediately form a dedicated internal team and engage with a qualified legal counsel experienced in international trade and customs law. The notification itself is the most important document you will receive at this stage, as it details the audit scope, the period under review, and the type of audit being conducted. Understanding these specifics allows for a targeted and efficient preparation, ensuring you are not wasting time on irrelevant documents or issues.

Key preparation steps include:

• Reviewing the Audit Scope: Thoroughly identify the specific issues and transactions that CBP is interested in. This helps you narrow down the required documentation and focus your internal review on the most critical areas.
• Organizing Key Documents: Gather and organize all relevant records, including import entry summaries, commercial invoices, bills of lading, and any documentation related to tariff classifications or special programs. A well-organized document system can significantly streamline the audit process and demonstrate your company’s professionalism.
• Conducting an Internal Review: Analyze potential risk areas such as valuation methodologies, the application of preferential duty rates, and compliance with anti-dumping and countervailing duties. This proactive review allows you to identify and correct any potential discrepancies before the auditors find them, which can significantly reduce penalties.

During the on-site audit, CBP auditors will conduct interviews and review the documents you have prepared. It is imperative that all communications with the auditors are handled by designated personnel. Do not volunteer information that is not directly requested and ensure all answers are accurate and consistent. This controlled approach minimizes the risk of inadvertently providing information that could lead to further scrutiny.

Key points to remember:

• Stay within the Scope: Ensure that the auditors' questions and requests remain within the scope defined in the initial audit notification. Politely redirect any questions that go beyond the agreed-upon parameters.
• Document Everything: Maintain a meticulous record of all questions asked by the auditors and all documents provided. This log serves as a crucial reference and can be used to track the audit's progress and ensure consistency.
• Legal Counsel: Have your legal counsel present during interviews to advise on the appropriate responses and protect your company’s interests. Their presence can also ensure that the audit procedures are being followed correctly and that your rights are being upheld.

Following the on-site audit, CBP will provide a detailed report of its findings. This report will outline any identified discrepancies, potential revenue loss, and proposed actions, which you will then need to review carefully.

If a CBP audit results in a finding of non-compliance and a bill for duties or penalties, an importer can challenge the decision. The first step is typically to file a formal protest with CBP, which is an administrative appeal that allows the agency to review its own decision. If this is denied, the importer can file a lawsuit with the U.S. Court of International Trade (CIT) in New York, which has exclusive jurisdiction over customs disputes.

Navigating these procedures requires a deep understanding of legal principles and factual evidence. The assistance of an experienced attorney is invaluable for protecting your company's interests and formulating a compelling legal argument. They can help you gather the necessary evidence, prepare legal briefs, and represent you in court, ensuring you have the best possible chance of a favorable outcome.