Navigating United States Customs: A Guide to Customs Bonds
Importing goods can be an exciting venture, but navigating customs regulations can feel like crossing uncharted territory. Importing requires understanding customs regulations, which guarantee compliance with customs laws and duties. One of the biggest hurdles when starting the import process is obtaining a bond.
This post dives into the world of bonds, providing clarity and answers to some of the most commonly asked questions. If none of these are questions you have, please reach out to one of our licensed customs brokers at Importal.
What is a Customs Bond?
A customs bond is like an insurance policy between the importer, a surety company, and Customs Border and Protection. It ensures the importer will meet obligations, such as paying taxes and following customs rules, by providing financial security.
Consider it a safety net for both the importer and CBP. Importers can clear their shipments from customs quickly and efficiently without paying all the duties and taxes upfront. Even if the importer fails to comply with their obligations, CBP guarantees to receive the owed duties and taxes.
Types of Bonds:
Two main types of customs bonds exist:
Single Transaction Bond (STB): Covers a single import transaction. A Single Entry Bond refers to either an ISF filing or a customs entry, for an example.
Continuous Transaction Bond (CTB): Provides ongoing coverage for multiple import transactions over a year. Also referred to as Continuous Customs Bond
When is a Customs Bond Required?
A bond is mandatory for any import into the United States. Few situations exclude a bond from any import transaction. Please reach out to us at Importal if you have any questions or concerns.
How Much Does a Customs Bond Cost?
The cost depends on several factors, including the type of bond (STB or CTB), the value of your imports, and your financial history. STBs have a fixed fee based on the bond amount needed. The amount needed is usually your total commercial value plus 10% of the duties and fees. CTBs charge a yearly premium based on a percentage of your estimated duties and fees.
Deciding Between Continuous Bonds vs Single Entry Bonds?
If you're an one-time or infrequent importer with occasional shipments, an STB might be sufficient. But for frequent importers, a CTB offers convenience and cost-effectiveness.
Annual Bond vs. Continuous Bond?
An "annual bond" does not exist. "Continuous bond" with an annual renewal might be what you're looking for.
What does a customs bond cover?
The bond covers duties, fees, and penalties associated with your imports.
The HTS code determines duties based on the type and value of your goods. Certain products contain fees like alcohol, tobacco, and fuel. Additional fees include merchandise processing fees, a flat fee charged for processing each customs entry. Lastly harbor maintenance fees is also a flat fee charged for harbor maintenance and development for any ocean shipment.
Penalty and fines are a result of violations of customs regulations. This includes declaring the value of goods or classifying the goods incorrectly. Another cost can come in the form of interest if you fail to pay duties, taxes, penalties, or fines on time.
What does a customs bond not cover?
The bond does not cover transportation costs, storage fees, and product liability.
Transportation costs include the cost of shipping your goods from the origin country to the United States.
Storage fees include regular storage costs while your goods are awaiting distribution at the terminal or the warehouse. It may cover storage fees incurred from customs delay, however.
Product liability includes any product defects or injuries caused by their use.
Why is a customs bond needed?
Customs bonds protect the government's financial interests if duties, fees, and penalties are missing from a payment. Import duties and fees are a significant source of revenue for the United States government. This helps the government maintain a predictable revenue stream and avoid delays in funding essential services and programs.
Encourages compliance with customs regulations for importers. Importers have a legal obligation to comply with various customs regulations. This includes accurately declaring goods, paying duties and fees, and obtaining necessary permits and licenses. If importers fail to comply with regulations, the surety company will be responsible for paying the government.
Streamline smooth and efficient import clearance by allowing importers to clear their goods quickly. Without a bond, importers will need to pay all duties and fees upfront before their goods can clear customs. This process can be time-consuming and cumbersome, leading to delays in the entire logistics process. The bond helps facilitate faster product delivery and reduce logistical bottlenecks.
Promoting fair trade and competition by ensuring everyone follows the same rules and pays their fair share. This discourages unfair competition based on non-compliance and promotes equitable trade practices.
Where can I buy a customs bond?
Please visit Importal’s website, sign up, and contact one of our members. We will issue the appropriate bond for your needs.
Understanding customs bonds empowers importers to navigate import regulations with confidence. Remember, this blog post serves as a starting point and not an all inclusive document for each import. Many situations are complex and require expert consultation to navigate imports compliantly.
Interested in learning more or need additional help with importing into the United States? Visit our website and contact Importal for licensed brokers. We offer complete customs brokerage services, which include ISF filings, entry clearance, and bonds. We can connect you with a licensed broker to discuss your needs and find the right bond and services for you.
