What is a U.S. Customs Bond?
Very few importers are aware of why they need a Customs Bond, or what the bond actually does. Simply put, a U.S. Customs Bond is a document that Customs & Border Protection (CBP) require all importers of record to have. If an importer does not have the bond, they will not be able to take their goods from the port of entry. CBP will hold the goods until the importer attains the Customs Bond. The importer will then be subject to the associated fines or penalties for importing without a Customs Bond.
Most Customs Bonds are filed as Import Bonds. This document acts as a financial guaranty between the Insurance/Surety company issuing the Customs Bond, the Importer of Record, and CBP. The Import Bond provides a guarantee to CBP that they will collect import duties, taxes, fines or penalties, if not from the importer then from the insurance/surety company who issued the bond. To explain further, CBP requires all importers to file an Import Bond in order to clear their entries, even if the goods are duty free.
Whether you know it or not; if you are importing, you have a Customs Bond. The size of your bond requirement is dependent on the dollar amount of imports that you are receiving, and the rate at which they are taxed. For example, the smallest and most common Customs Bond is a $50,000 bond. $50,000 is in no way reflective to the price of the bond, rather it refers to a percentage of the amount of duties and taxes associated with receiving the imports. This bond amount will suffice for imports requiring up to $500,000 in duties and taxes, which equals a rough estimation of about 5 million dollars of goods imported. To explain further—let's say on an annual basis you import 1 million dollars worth of goods. Associated with these imports are roughly $100,000 in duties and taxes. The $50,000 importer bond will be sufficient.
It is essential for importers to become familiar with their Customs Bond. This knowledge will prove particularly beneficial in situations where the volume of imports increases or decreases from year to year. An informed importer will be able to determine what size bond they need on file to cover those imports, and they will avoid any penalties or overcharges that they may incur for having a bond that is not of the appropriate size.
Check back later for more U.S Customs Bond Basics for importers. Here, knowledge about your Customs Bond is IMPORTant!
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