Washington D.C. Customs Evasion Reporting and Penalties

The following actions are considered forms of customs evasion and are subject to reporting and investigation. These are serious violations that can result in significant penalties under U.S. law.

• Undervaluation of Goods: Declaring a value for imported items that is lower than their true transaction value to reduce the amount of duty owed.
• Misclassification of Goods: Falsely describing goods to fall under a tariff heading with a lower duty rate. This includes changing a high-tariff item to a low-tariff one.
• False Country of Origin: Falsely claiming a country of origin to benefit from lower duty rates or free trade agreements (FTAs).
• Quantity Manipulation: Underreporting the number of units or total weight of goods being imported to reduce the total duty owed.
• Misrepresenting Condition: Declaring new goods as used or refurbished to qualify for a lower value and duty rate.
• Bypassing Quotas: Attempting to evade import quotas by misrepresenting the goods or their origin.
• Violation of End-Use Requirements: Importing goods for a specific, duty-free purpose (e.g., research or temporary use) and then illegally selling or using them for a commercial purpose.

In addition to criminal charges, a person or company found to have committed customs evasion may face significant civil and administrative penalties. These are designed to recoup lost revenue and deter future offenses. The most common penalties are monetary fines.

• 19 U.S.C. § 1592: This statute addresses fraud, gross negligence, and negligence in customs transactions. Penalties can be substantial, often calculated as a percentage of the value of the merchandise or the duties lost.
• Negligence: A civil penalty equal to the lesser of the domestic value of the merchandise or 20% of the duties, taxes, and fees lost.
• Gross Negligence: A civil penalty equal to the lesser of the domestic value of the merchandise or 50% of the duties, taxes, and fees lost.
• Fraud: A civil penalty equal to the domestic value of the merchandise.

For more serious offenses, particularly those involving intentional deception and large sums of money, criminal charges can be brought. These charges can result in imprisonment, significant fines, or both. The penalties are outlined in various sections of the U.S. Code.

• 18 U.S.C. § 545: This is the primary criminal statute for customs fraud. It prohibits importing or bringing into the United States any merchandise contrary to law. A violation can lead to a fine of up to $250,000 for individuals or $500,000 for organizations, or imprisonment for up to 20 years, or both.
• 18 U.S.C. § 1001: This statute prohibits making false statements to federal officials. It is often used in conjunction with customs fraud cases. Violators can face a fine of up to $250,000 and imprisonment for up to five years.

The CBP and other federal agencies may offer monetary awards to individuals who provide information that leads to the recovery of fines, penalties, or duties. The amount of the reward is determined based on several factors, including the value of the recovered funds and the significance of the information provided by the informant.

The process for receiving a reward is governed by federal regulations. An individual must file a formal claim for the reward, providing detailed information about the violation and their contribution to the case. The government will then review the claim and, if the information led to a successful recovery, determine an appropriate award amount. It's important to note that the reward is discretionary and not guaranteed.

Individuals who report customs evasion often fear retaliation from the companies or individuals they are reporting. To address this, federal law provides certain protections for whistleblowers. The Whistleblower Protection Act of 1989 and other related laws are designed to shield federal employees who report waste, fraud, and abuse.

For private citizens, the government takes steps to protect their identity and the information they provide. Reporting channels are designed to be confidential, and agencies like the CBP have strict protocols to prevent the unauthorized disclosure of a whistleblower's identity. This protection is a critical element of the reporting system, as it allows individuals to come forward without fear of retribution.