CBP Working Towards Centralized, Automated Single Transaction Bond Process in 2014
CBP said it's working on revising its regulations to centralize and automate its single transaction bond process, said Paula Connelly, a trade lawyer based in Burlington, Mass. Connelly attended a June 27 meeting on the single transaction bond process at the Port of Boston, which officials said is one of a series of CBP port visits to gather feedback from the trade on its plan to centralize the STB process. Bruce Ingalls, director of CBP’s Revenue Division, hopes to see implementation of the centralized system by the summer of 2014, Connelly said.
Sign up for a free preview to unlock the rest of this article
If your job depends on informed compliance, you need International Trade Today. Delivered every business day and available any time online, only International Trade Today helps you stay current on the increasingly complex international trade regulatory environment.
The STB process is currently handled at the port level. But the ports are accepting bonds that contain errors and should be rejected, said the Department of Homeland Security’s Office of Inspector General in a 2011 report (see 11080314)]. According to the report, between fiscal years 2007 and 2010 CBP wrote off $46.3 million in revenue. Potential losses could be much larger -- about $8 billion of the $12 billion in STBs accepted by the ports in FY 2009 contain errors that may result in noncollection of duties, the report said. And sureties are refusing to pay on the deficient bonds. CBP officials said there are 167 cases at the Court of International Trade in which CBP has filed suit against an importer and surety, and the surety has challenged the validity of the STB due to execution problems which were not picked up by CBP during the entry process, reported Connelly.
The 2011 DHS report recommended CBP create a centralized office to develop and implement CBP policy, report on STB activities, and monitor results. It also said CBP should automate its STB process to provide for better tracking, develop formal policies and procedures for STBs, and use risk-based methods to determine bond amounts. CBP concurred, and Congress approved funding for centralized “e-bond” system for STBs, CBP officials said at the meeting.
According to the plan currently under development by CBP, STBs will be electronically transmitted to CBP as part of the entry process, CBP officials said at the meeting. The STB portal will be part of Automated Commercial Environment (ACE), and not Automated Commercial System (ACS), they said.
Because STB applications are already filed electronically through the surety company prior to approval and the printing of the bond, the change will be that instead of printing the bond, the bond information will be transmitted to CBP directly, the officials said. CBP will not review the bond except for when the bond amount is insufficient and CBP will not be considered a party to the bond, officials said. CBP will no longer be reviewing paper copies of bonds at the time of entry, and it's anticipated that the “docs required” message will no longer apply to these transactions, Connelly said. Because of the changes, sureties will no longer be able to use bond execution issues as a defense for Customs penalties, the officials said.
According to the CBP officials, the response from the trade has been favorable so far. The trade sees the upcoming system as better than the traditional paper STB being attached to the entry documents, the officials said. But the changes can't be directly implemented -- Customs regulations on bonds will need to be revised. CBP will be working on that this summer, the officials said. The agency hopes to have an initial IT system ready by February 2014 for testing, which will take several months. A significant issue for implementation will be whether CBP will have both the required funding and staff to ensure completion, the officials said. At the meeting, Bruce Ingalls said the CBP Revenue Division anticipates eventually processing continuous bonds in the same way, Connelly said.