Practice areas > Bonded Warehouse Audits & Compliance Programs

Compliance Programs

Without proper respect and advanced preparation for meeting the requirements of the U.S. Bureau of Customs and Border Protection regarding imports and the standards of the U.S. Bureau of Industry and Security for exports, profits can escape like water through a sieve for even the most experienced importer. Individualized, shrewd compliance programs are a must for successful international trade.

Compliance With A Variety of Federal Authorities, Laws, and Treaties

First, the standards of numerous U.S. authorities can be involved. Effective compliance must insure that all applicable rules and regulations are met, such as those propounded and/or enforced through the:

Food & Drug Administration;
Federal Communications Commission;
Drug Enforcement Administration;
Bureau of Alcohol, Tobacco & Firearms;
Bureau of Customs & Border Protection; or the
Department of Homeland Security.

Second, there must be compliance with a variety of American laws as well as any applicable international treaties together with voluntary initiatives. These include C-TPAT (Customs-Trade Partnership Against Terrorism); the Public Health Security and Bioterrorism Preparedness & Response Act of 2002, along with other product-specific legislation; and applicable Free Trade agreements, such as NAFTA and DR-CAFTA.

Failing to fully comply with federal regulations can not only result in penalties being issued in the short term and delays in deliveries, it can also mean inspections in the future will occur at a higher rate. For even the most sophisticated entities, having independent, expert customs advice to insure compliance remains both efficient in time as well as extremely cost-effective.

Fuerst Ittleman Compliance Programs & Analysis

Determining the optimal compliance program for your company is obviously a complex task. Fuerst Ittleman has extensive expertise not only in analyzing specific import and export situations from both a legal and business perspective, Fuerst Ittleman also routinely assists clientele in developing self-assessment strategies including how to effectively and efficiently conduct internal audits.

Working together, Fuerst Ittleman and its clients discover and implement the optimal compliance program for each situation. These projects can involve:

Classification of goods or merchandise
Valuation of goods or merchandise
Strategies for optimizing duty savings opportunities, such as duty drawback or special duty programs
Strategies for reducing penalty exposure
Eligibility under NAFTA, DR-CAFTA, and other free trade agreements

Bonded Warehouse Audits

Bonded warehouses make good business sense, and for this reason they exist in all parts of the world. Bonded warehouses allow goods to be stored in facilities prior to any duties being paid, or alternatively, stored under a bond and under joint custody with the importer (or its agent) and the customs officials. (If a private company manages the warehouse, a customs bond must also be posted with the government.)

Bonded Warehouses - Public, Private, and Regulation by Classification

Bonded warehouses also give the owner an opportunity to prepare the goods for market: perhaps the goods need to be repackaged, or made ready for sale. Sometimes, goods simply need to be stored for a certain period of time.

Bonded warehouses provide several business advantages. For instance, importers do not pay any duty until the goods are withdrawn, and then at the effective rate at that time (not at the time they were stored). If the deal falls through and a non-U.S. buyer is found, the importer can remove the goods without ever having to pay duty to the United States. Additionally, some goods are subject to federal quotas; these goods can be stored in bonded warehouses, with no duty paid, for up to five (5) years.

Under U.S. federal regulations (19 C.F.R. 19.1), there are eleven types of customs bonded warehouses available in the United States. These include private bonded warehouses, where the owner stores its own goods; public bonded warehouses used for solely for the storage of imports; bonded yards or sheds for the storage of imported animals; bonded bins or elevators for the storage of grains; and duty-free stores.


Auditing by the Federal Government

Audits will occur for those taking advantage of bonded warehouses in the United States. If U.S. Customs officials find that an importer is both (1) legally compliant and (2) has a system in place to insure future, continued compliance then the audit will be fast, and the importer will probably not have much Customs oversight in the near future.

However, if Customs officials find that the importer is either (1) not fully in compliance with all U.S. laws and regulations, as well as pertinent free trade agreements and any applicable voluntary initiatives, or (2) has no system in place to insure its continued compliance over time, then the importer is guaranteed to undergo Customs scrutiny for a significant period of time. The importer will also face monetary penalties for the failure to meet the legal requirements that equals noncompliance.

Preemptive Auditing Services by Fuerst Ittleman

Fuerst Ittleman offers preemptive auditing services for clients who want to be prepared in advance for governmental review. Fuerst Ittleman will simulate a U.S. Customs & Border Protection bonded warehouse audit to insure that the warehouse proprietor is compliant with all bonded warehouse regulations.

Fuerst Ittlemansimulation will include:

1. Assessing the physical condition of the Bonded Warehouse space including inspection of the premises, insuring all merchandise is stored neatly, and that the warehouse is clean and orderly;

2. Reviewing all permit files to insure all withdrawal documentation matches the running inventory in each file;

3. Verifying physical count against each permit file;

4. Devising a plan, if necessary, to bring each permit file into compliance; and

5. Submitting prior disclosures to Customs and voluntarily tendering any duties that may be owed on merchandise that cannot be accounted for on the documentation.