This is when an importer identifies that inaccurate entry data has been included in their declarations to US Customs & Border Protection (CBP), and wants to make corrections proactively. Notifying CBP of self-identified errors will reduce the amount of the potential fines administered.
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What is a prior disclosure?
It is a voluntary disclosure of a violation(s) that occurred prior to the commencement of a formal investigation. Many of these will involve tendering a loss of duties associated with the violation.
How does a prior disclosure work?
Once an error is identified, the importer should review all of the instances that it occured over the previous 5 years. That is how long CBP can look back at prior entries. Common prior disclosures can cover misclassification, undervaluation, incorrect country of origin, incorrectly declared free trade agreements, etc. When submitting to customs, you should make sure our trade advisory team or a trade attorney reviews it to make sure that there aren’t any additional violations that CBP may uncover. Submitting a prior disclosure without vetting it for other possible violations may expose you to penalties that aren’t under the same protections as a prior disclosure.
Why file a prior disclosure?
To show customs that you use reasonable care, and also to reduce the potential fines administered if CBP identified the errors on their own through an audit.