BRO-2-01-RR:IT:EC 114199 GG
Mr. Mark C. Ramos
P.O. Box 29870
Los Angeles, CA 90029
RE: Meaning of “Customs Business”; 19 U.S.C. §1641(a)(2); License Required to Perform Certain Transactions
Dear Mr. Ramos:
This is in response to your facsimile, dated December 16, 1997, which forwarded to us a letter you had sent to U.S. Customs in Los Angeles, asking whether certain acts constituted customs business. Our response follows.
FACTS:
You are a former employee of the U.S. Customs Service who would like to serve as a consultant to persons interested in filing drawback claims. Currently, you are not licensed as a customs broker. The specific tasks you would like to perform are as follows:
Teach exporters and other parties how to file drawback claims. This might include giving instruction on the drafting of drawback contracts, and on the types of forms required by Customs and their correct way of preparation. In actual transactions the clients would prepare and sign all necessary documentation.
Assist clients in their interactions with Customs, by providing advice to questions posed by the agency about the drawback contract or claim. Contact between you and Customs would take place either at the port, at the client’s place of business, or through a telephone conference, always with the client present.
Help brokers establish drawback programs and prepare drawback claims for their own clients. This would include assisting the broker in interactions with Customs on issues involving the claims.
Draft, sign and file protests on behalf of clients after obtaining the necessary powers of attorney.
You reference Headquarters Ruling Letter (“HRL”) 224768, dated October 20, 1993, as authority for the performance of these listed activities by an unlicensed person.
ISSUE:
Whether the transactions listed above may be performed by a person without a broker’s license.
LAW AND ANALYSIS:
Section 641 of the Tariff and Trade Act of 1930 (19 U.S.C. 1641), as amended, provides that no person may conduct customs business (other than solely on behalf of that person) unless that person holds a valid customs broker’s license issued by the Secretary of the Treasury. The term “customs business” means
[T]hose activities involving transactions with the Customs Service concerning the entry and admissibility of merchandise, its classification and valuation, the payment of duties, taxes, or other charges assessed or collected by the Customs Service upon merchandise by reason of its importation, or the refund, rebate, or drawback thereof. It also includes the preparation of documents or forms in any format and the electronic transmission of documents, invoices, bills, or parts thereof, intended to be filed with the Customs Service in furtherance of such activities, whether or not signed or filed by the preparer, or activities relating to such preparation, but does not include the mere electronic transmission of data received for transmission to Customs.
(19 U.S.C. §1641(a)(2))
The definition of customs business cited above includes provisions added in 1993 pursuant to the Customs Modernization Act (“Mod Act”) (Public Law 103-182). Specifically, document preparation and activities leading to such preparation are activities now reserved as the province of importers or licensed brokers. Prior to the enactment of the Mod Act, non-licensed persons could prepare Customs documents that were then signed and filed by others. This understanding of the old law is reflected in the ruling to which you cite, HRL 224768. That ruling, issued prior to the Mod Act, gave an accurate interpretation of the law in existence at the time it was written. However, the statutory amendments discussed above effectively overruled the portions of the ruling pertaining to document preparation for future transactions. Applied to your situation, you would be conducting customs business without a license if you prepare, or help clients to prepare, forms or documents that will be filed with Customs. The fact that the client will sign and file them is immaterial. Customs can impose a penalty of up to $10,000 per transaction on unlicensed persons who violate this provision.
In contrast, a license is not required to give instruction and general advice on various Customs topics. Teaching brokers, importers and exporters how to prepare and file drawback claims, and helping them to establish drawback programs would fall under this category. We permit these types of educational activities because they have no direct relationship to actual transactions with Customs. Our position on this issue thus remains unchanged from that stated in HRL 224768. We would, however, draw the line at unlicensed persons advising clients on issues involving particular entries or drawback claims filed or to be filed with Customs. This is because 19 U.S.C. §1641(a)(2) specifically states that transactions involving the entry and admissibility of merchandise, the payment of duties thereon, and the refund or drawback of duties, fall within the definition of customs business. For this reason, you may not advise brokers or other clients on actual drawback contracts or claims. Furthermore, you would be precluded from entering into discussions between Customs and a client on issues pertaining to such transactions. These activities are restricted by law to licensed brokers and attorneys at law.
Finally, you are correct in asserting that you may prepare, sign and file protests if you have obtained authority from an importer in the form of a properly executed power of attorney. This is an exception to the rule that prohibits the involvement of unlicensed consultants in actual transactions with Customs. The authority for this exception is found in 19 CFR §174.3.
HOLDING:
A consultant who is neither a licensed customs broker nor an attorney at law may give instruction or advice to clients on general issues involving the U.S. Customs Service. This could include teaching brokers, importers and exporters how to establish a drawback program or how to prepare and file a drawback claim. However, the unlicensed consultant may not offer advice, or participate in discussions with Customs, on issues relating to a particular transaction with Customs. He also cannot prepare, or assist a client in preparing, documents and forms intended to be filed with the Customs Service in furtherance of any customs business activity, unless the document is a protest and the consultant has been issued a power of attorney to file the protest.
Sincerely,
Jerry Laderberg
Chief
Entry Procedures and Carriers Branch