CBP to Announce New Mitigation Guidelines for Late-Filed Petitions, Will Take Effect Jan. 9, Avalon Says
CBP provided advanced notice to some parties about new mitigation guidelines for late-filed petitions, which will take effect Jan. 9. Avalon Risk Management, as a result, is recommending that its broker clients review their open claim inventory to "proactively try to identify any liquidated damage claims that may be considered late due to outstanding document requests, and we will be filing appropriate petitions and/or extensions with CBP" before Jan. 9, it said in a email to clients (here). The bulletin (here) is to be published by CBP Jan. 9, and take effect the same date.
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The Avalon email also notes a Broker Power article on CBP's regulatory agenda saying that publication of a final rule on Importer Security Filing is expected in February 2013 (see ITT's Online Archives 13010330). Avalon said CBP indicated ACE deployment for AMS and publication of the Final Rule needed to be in place before CBP could proceed with full enforcement of ISF and begin assessment of liquidated damages. Since the rule is scheduled to be published in February, it said liquidated damages for ISF could be "on the near horizon." The early draft of the expected Jan. 9 document says CBP is amending its guidelines for cancellation and mitigation of claims for liquidated damages where petitioners are late in filing claims for relief.
The document also provides for a new calculation of mitigated amounts to be afforded in cases where petitions are filed late. CBP said that, over time, it has seen an increase in untimely filed petitions, so it decided to amend its mitigation guidelines to limit the time period and circumstances in which late petitions will be considered or accepted, and to change the formula through which late petition mitigation is calculated. Under the new guidelines, untimely petitions will be accepted or considered only if the petitioner is able to demonstrate the existence of extraordinary circumstances, such as some intervening event beyond the petitioner's control resulting in a justifiable inability to timely address or respond to the claim, it said. Generally no untimely petition will be accepted in any circumstance if it is filed:
- More than 180 days after the date of mailing of the notice of claim to the bond principal, or in the case of a surety, the date of mailing of the first demand on surety.
- After the petitioner has previously submitted a petition in the same case and/or been offered mitigation in the same case, and such mitigation amount was not paid within the prescribed period.
- After the claim has been referred to Office of Chief Counsel for collection action.
- After the commencement of sanctioning action against the bond principal.
- Or after the issuance of a notice to show cause against a surety.
One exception is untimely petitions for relief of liquidated damages claims issued for: (l) the late filing of an entry summary; (2) the late payment of estimated duties (including late payment of duties under the periodic monthly statement test); (3) the late payment of passenger processing fees; or (4) late filing or late payment of reconciliation entries may be accepted without regard to the limitations expressed in paragraphs a and b above at any time prior to the circumstances described in paragraphs c through e above. For calculating the mitigated amount on a late petition, CBP will first determine the base amount, and then determine the "additional mitigation amount" by multiplying the full assessed amount of the claim by 0.1 percent times the number of days the petition is late, it said. That will be added to the base amount to produce the mitigated amount applied to the untimely filed petition. In no case will the additional mitigated amount to be added to the base amount be less than $400, it said. An accompanying FAQ sheet (here) provides the following information:
- The new guideline applies only to petitions filed outside the 60-day regulatory time period.
- The new guideline will not affect Option 1 amounts if you timely pay the Option 1 amount or timely petition for relief.
- The new guideline doesn't apply to any late petition filed before Jan. 9.
- Petitioners can seek to have late petitions reconsidered, but only if the mitigated amount offer related to a late petition filed after July 2011 and before Jan. 9.
- Liquidated damages assessed amounts will continue to be assessed in accordance with CBP regulations.
- Offers in compromise are not covered by the new regulation, and will not be affected by the new guideline.
Further information: John Connors, 202-325-0050.