What is a U.S. Customs Bond and Why Is It Needed?
Customs and Border Protection (CBP) defines a bond as, "...a contract which is given to ensure the performance of an obligation imposed by a law or regulation."
Simply put, this is similar to an insurance policy that can be used to help cover duties, taxes, and fees (DTF), imposed by CBP.
A bond is required by U.S. Customs to cover all commercial shipments into the U.S.
2 Types of Bonds Exist
1. Single Entry Bond (SEB)
The single entry bond is used to cover a single CBP transaction. The minimum amount for an SEB is $1,000. It should be noted that if the goods are subject to Partner Government Agencies (PGAs), the bond is required to be executed in the amount of three times the total entered value, plus all duties, tax and fees. This bond can only be used once and is cancelled when the transaction is complete. GHY charges $5.00 per $1,000 of the shipment invoice with a minimum amount of $30 and will automatically create a SEB if there is no continuous bond on file.
2. Continuous Bond
The continuous bond covers multiple customs transactions over one year. The bond amount minimum is $50,000 and is based on the importer's duties, taxes, and fees over a one-year period.
The following formula is used to determine the bond amount needed for the year:
- Zero to $1,000,000 DTF - the bond limit of liability amount shall be fixed in multiples of $10,000 nearest to 10 percent of duties, taxes and fees paid by the importer or broker acting as importer of record during the calendar year preceding the date of the application.
- Over $1,000,000 DTF - the bond limit of liability amount shall be fixed in multiples of $100,000 nearest to 10 percent of duties, taxes and fees
- In either of these two categories, a bond may be demanded with a limit of liability amount greater than that computed using this formula, provided sufficient evidence of high risk is on-hand to support the higher amount. High risk evidence is as follows:
- Outstanding, Unpaid Bills
- Debit Vouchers
- Surety Paid Claims
If, at any time during the life of the bond, CBP determines the bond amount is not enough or inadequate, you will have 30 days from the date of notification to remedy the deficiency.
For additional information on the monetary guidelines to set bond amounts, please read Customs Directive 3510-004.
GHY charges $500 per year for a $50,000 continuous bond. If the bond amount is over $50,000, additional fees will apply.
Needing a bond or assistance? Contact us today!