Increased Enforcement Activities “How to Prepare & Respond”

1. Increased Enforcement Activities“How to Prepare & Respond” WMTA Breakfast Wednesday, May 20, 2009

2. What We’ll Cover Today • What Does Customs Expect? • Things To Look Out For • Basic Entry Review • Identifying Discrepancies • Maintaining Audit Trail • Verification Checklist • Additional Back-up Information • Filing & Recordkeeping Protocol • Assessments • Internal • Quarterly • Annual

3. Recommended Reading See Customs Publication Titled: “What Every Member of the Trade Community Should Know About: Reasonable Care (a checklist for compliance)” February 2004

4. What Does Customs Expect? • Be informed & compliant on issues relating to the following core areas: • Classification • Valuation • Special Programs • Origin • Recordkeeping • Review every single transaction? • Yes • Perform periodic audits of your import operations? • Internal • Third party • Maintain audit trail

5. Things To Look Out For • Basic Entry Review • Ensure that all required documents are present: • Broker Invoice • CF-7501 (Entry Summary) • Commercial Invoice • Special Program Certificates (NAFTA, etc.) • Special Program Declarations (e.g. Assembly Declaration, Textile Declaration, etc.) • HTSUS Classifications • How do you classify? • Can you legally defend your classifications? • Entered Values • Cost Construction & Reporting • Duties Paid • Special Program Indicators (i.e. MX for NAFTA, 9802 & 9801, etc.)

6. Identifying Discrepancies • Material vs. Non-Material Errors • Material Errors Include: • Value Adjustments (greater than $20.00) • Origin Changes • HTSUS Code Changes • Special Claim Changes • Quantity Changes • Incorrect MID • Non-Material Errors Include: • Primarily Value Adjustments • Resulting in little or no duty difference (e.g. < $20.00) • Quantity and Weight Adjustments • If they do not affect duty and the difference is less than 5%)

7. Audit Trail • Import Entry Verification Checklist • Create a simple form in Excel or Word that contains: • Entry Number • Invoice Number • Entry Date • Broker Reference Number (as applicable) • Total Duty Paid • Country of Origin • Final Entry Package Documents Received (from broker) • Verify Import Data Elements for accuracy / compliance: • Classification • Special Claims • Quantity • Value • Etc. (match commercial invoice to CF-7501)

8. Additional Backup Information • How was the classification determined? • If a special program was claimed is all of the support documentation available? • Are the values declared accurate? • Are all the required declarations attached and properly filled out? • Do I have all my required certificates of origin?

9. Filing & Recordkeeping Protocol • Import Entry Verification Checklist • Broker Invoice • CF-7501 • All Commercial Invoices • All Special Program Declarations

10. Reviews & Assessments • Ongoing Reviews • Internal (“DIY”) • Quarterly Assessments (3rd Party) • Review of import entry documentation packages; specifically: • Entries with NAFTA claims • Entries with 9801/9802 claim • Entries with no Special Program claims (general entries) • Annual Assessments (3rd Party) • Validate all import compliance procedures for accuracy including: • Customs Compliance Manual • Supporting Documents (e.g., checklists, guidelines, etc.) • Flow Diagrams

11. Thank you… 2297 Niels Bohr Court #114 ▪ San Diego CA 92154 Tel. 619.671.0376 www.zissergroup.com