19 USC 1592 - Penalties for fraud, gross negligence, and negligence

U.S Code last checked for updates: Nov 22, 2024

§ 1592.

Penalties for fraud, gross negligence, and negligence

(a)

Prohibition

(1)

General rule

Without regard to whether the United States is or may be deprived of all or a portion of any lawful duty, tax, or fee thereby, no person, by fraud, gross negligence, or negligence—

(A)

may enter, introduce, or attempt to enter or introduce any merchandise into the commerce of the United States by means of—

(i)

any document or electronically transmitted data or information, written or oral statement, or act which is material and false, or

(ii)

any omission which is material, or

(B)

may aid or abet any other person to violate subparagraph (A).

(2)

Exception

(b)

Procedures

(1)

Pre-penalty notice

(A)

In general

(i)

describe the merchandise;

(ii)

set forth the details of the entry or introduction, the attempted entry or introduction, or the aiding or procuring of the entry or introduction;

(iii)

specify all laws and regulations allegedly violated;

(iv)

disclose all the material facts which establish the alleged violation;

(v)

state whether the alleged violation occurred as a result of fraud, gross negligence, or negligence;

(vi)

state the estimated loss of lawful duties, taxes, and fees, if any, and, taking into account all circumstances, the amount of the proposed monetary penalty; and

(vii)

inform such person that he shall have a reasonable opportunity to make representations, both oral and written, as to why a claim for a monetary penalty should not be issued in the amount stated.

(B)

Exceptions

The preceding subparagraph shall not apply if—

(i)

the importation with respect to which the violation of subsection (a) occurs is noncommercial in nature, or

(ii)

the amount of the penalty in the penalty claim issued under paragraph (2) is $1,000 or less.

(2)

Penalty claim

(c)

Maximum penalties

(1)

Fraud

(2)

Gross negligence

A grossly negligent violation of subsection (a) is punishable by a civil penalty in an amount not to exceed—

(A)

the lesser of—

(i)

the domestic value of the merchandise, or

(ii)

four times the lawful duties, taxes, and fees of which the United States is or may be deprived, or

(B)

if the violation did not affect the assessment of duties, 40 percent of the dutiable value of the merchandise.

(3)

Negligence

A negligent violation of subsection (a) is punishable by a civil penalty in an amount not to exceed—

(A)

the lesser of—

(i)

the domestic value of the merchandise, or

(ii)

two times the lawful duties, taxes, and fees of which the United States is or may be deprived, or

(B)

if the violation did not affect the assessment of duties, 20 percent of the dutiable value of the merchandise.

(4)

Prior disclosure

If the person concerned discloses the circumstances of a violation of subsection (a) before, or without knowledge of, the commencement of a formal investigation of such violation, with respect to such violation, merchandise shall not be seized and any monetary penalty to be assessed under subsection (c) shall not exceed—

(A)

if the violation resulted from fraud—

(i)

an amount equal to 100 percent of the lawful duties, taxes, and fees of which the United States is or may be deprived, so long as such person tenders the unpaid amount of the lawful duties, taxes, and fees at the time of disclosure, or within 30 days (or such longer period as the Customs Service may provide) after notice by the Customs Service of its calculation of such unpaid amount, or

(ii)

if such violation did not affect the assessment of duties, 10 percent of the dutiable value; or

(B)

if such violation resulted from negligence or gross negligence, the interest (computed from the date of liquidation at the prevailing rate of interest applied under section 6621 of title 26) on the amount of lawful duties, taxes, and fees of which the United States is or may be deprived so long as such person tenders the unpaid amount of the lawful duties, taxes, and fees at the time of disclosure, or within 30 days (or such longer period as the Customs Service may provide) after notice by the Customs Service of its calculation of such unpaid amount.

The person asserting lack of knowledge of the commencement of a formal investigation has the burden of proof in establishing such lack of knowledge. For purposes of this section, a formal investigation of a violation is considered to be commenced with regard to the disclosing party and the disclosed information on the date recorded in writing by the Customs Service as the date on which facts and circumstances were discovered or information was received which caused the Customs Service to believe that a possibility of a violation of subsection (a) existed.

(5)

Prior disclosure regarding claims under the USMCA

(6)

Prior disclosure regarding claims under the United States-Chile Free Trade Agreement

(7)

Prior disclosure regarding claims under the United States-Singapore Free Trade Agreement

(A)

An importer shall not be subject to penalties under subsection (a) for making an incorrect claim that a good qualifies as an originating good under section 202 of the United States-Singapore Free Trade Agreement Implementation Act if the importer, in accordance with regulations issued by the Secretary of the Treasury, voluntarily and promptly makes a corrected declaration and pays any duties owing.

(B)

In the regulations referred to in subparagraph (A), the Secretary of the Treasury is authorized to prescribe time periods for making a corrected declaration and paying duties owing under subparagraph (A), if such periods are not shorter than 1 year following the date on which the importer makes the incorrect claim that a good qualifies as an originating good.

(8)

Prior disclosure regarding claims under the United States-Australia free trade agreement

(A)

In general

(B)

Time periods for making corrections

(9)

Prior disclosure regarding claims under the Dominican Republic-Central America-United States Free Trade Agreement

(10)

Prior disclosure regarding claims under the United States-Peru Trade Promotion Agreement

(11)

Prior disclosure regarding claims under the United States–Korea Free Trade Agreement

(12)

Prior disclosure regarding claims under the United States–Colombia Trade Promotion Agreement

(13)

Prior disclosure regarding claims under the United States–Panama Trade Promotion Agreement

(14)

Seizure

(d)

Deprivation of lawful duties, taxes, or fees

(e)

Court of International Trade proceedings

Notwithstanding any other provision of law, in any proceeding commenced by the United States in the Court of International Trade for the recovery of any monetary penalty claimed under this section—

(1)

all issues, including the amount of the penalty, shall be tried de novo;

(2)

if the monetary penalty is based on fraud, the United States shall have the burden of proof to establish the alleged violation by clear and convincing evidence;

(3)

if the monetary penalty is based on gross negligence, the United States shall have the burden of proof to establish all the elements of the alleged violation; and

(4)

if the monetary penalty is based on negligence, the United States shall have the burden of proof to establish the act or omission constituting the violation, and the alleged violator shall have the burden of proof that the act or omission did not occur as a result of negligence.

(f)

False certifications of origin under the USMCA

(1)

In general

(2)

Prompt and voluntary disclosure of incorrect information

(3)

Exception

A person shall not be considered to have violated paragraph (1) if—

(A)

the information was correct at the time it was provided in a USMCA certification of origin but was later rendered incorrect due to a change in circumstances; and

(B)

the person promptly and voluntarily provides written notice of the change in circumstances to all persons to whom the person provided the certification.

(g)

False certifications of origin under the United States-Chile Free Trade Agreement

(1)

In general

(2)

Immediate and voluntary disclosure of incorrect information

(3)

Exception

A person may not be considered to have violated paragraph (1) if—

(A)

the information was correct at the time it was provided in a Chile FTA Certificate of Origin but was later rendered incorrect due to a change in circumstances; and

(B)

the person immediately and voluntarily provides written notice of the change in circumstances to all persons to whom the person provided the certificate.

(h)

False certifications of origin under the Dominican Republic-Central America-United States Free Trade Agreement

(1)

In general

(2)

Prompt and voluntary disclosure of incorrect information

(3)

Exception

A person may not be considered to have violated paragraph (1) if—

(A)

the information was correct at the time it was provided in a CAFTA–DR certification of origin but was later rendered incorrect due to a change in circumstances; and

(B)

the person promptly and voluntarily provides written notice of the change in circumstances to all persons to whom the person provided the certification.

(i)

False certifications of origin under the United States-Peru Trade Promotion Agreement

(1)

In general

(2)

Prompt and voluntary disclosure of incorrect information

(3)

Exception

A person shall not be considered to have violated paragraph (1) if—

(A)

the information was correct at the time it was provided in a PTPA certification of origin but was later rendered incorrect due to a change in circumstances; and

(B)

the person promptly and voluntarily provides written notice of the change in circumstances to all persons to whom the person provided the certification.

(j)

False certifications of origin under the United States–Korea Free Trade Agreement

(1)

In general

(2)

Prompt and voluntary disclosure of incorrect information

(3)

Exception

A person shall not be considered to have violated paragraph (1) if—

(A)

the information was correct at the time it was provided in a KFTA certification of origin but was later rendered incorrect due to a change in circumstances; and

(B)

the person promptly and voluntarily provides written notice of the change in circumstances to all persons to whom the person provided the certification.

(k)

False certifications of origin under the United States–Colombia Trade Promotion Agreement

(1)

In general

(2)

Prompt and voluntary disclosure of incorrect information

(3)

Exception

A person shall not be considered to have violated paragraph (1) if—

(A)

the information was correct at the time it was provided in a CTPA certification of origin but was later rendered incorrect due to a change in circumstances; and

(B)

the person promptly and voluntarily provides written notice of the change in circumstances to all persons to whom the person provided the certification.

(l)

False certifications of origin under the United States–Panama Trade Promotion Agreement

(1)

In general

(2)

Prompt and voluntary disclosure of incorrect information

(3)

Exception

A person shall not be considered to have violated paragraph (1) if—

(A)

the information was correct at the time it was provided in a Panama TPA certification of origin but was later rendered incorrect due to a change in circumstances; and

(B)

the person promptly and voluntarily provides written notice of the change in circumstances to all persons to whom the person provided the certification.

(June 17, 1930, ch. 497, title IV, § 592, 46 Stat. 750; Aug. 5, 1935, ch. 438, title III, § 304(b), 49 Stat. 527; Pub. L. 95–410, title I, § 110(a), Oct. 3, 1978, 92 Stat. 893; Pub. L. 96–417, title VI, § 609, Oct. 10, 1980, 94 Stat. 1746; Pub. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095; Pub. L. 103–182, title II, § 205(c), title VI, § 621, Dec. 8, 1993, 107 Stat. 2095, 2180; Pub. L. 104–295, §§ 3(a)(4), (5), 21(e)(12), (13), Oct. 11, 1996, 110 Stat. 3515, 3531; Pub. L. 106–36, title I, § 1001(b)(8), June 25, 1999, 113 Stat. 132; Pub. L. 108–77, title II, § 205(a), Sept. 3, 2003, 117 Stat. 930; Pub. L. 108–78, title II, § 204, Sept. 3, 2003, 117 Stat. 961; Pub. L. 108–286, title II, § 205, Aug. 3, 2004, 118 Stat. 939; Pub. L. 109–53, title II, § 206(a), Aug. 2, 2005, 119 Stat. 484; Pub. L. 110–138, title II, § 205(a), Dec. 14, 2007, 121 Stat. 1475; Pub. L. 112–41, title II, § 204(a), Oct. 21, 2011, 125 Stat. 448; Pub. L. 112–42, title II, § 205(a), Oct. 21, 2011, 125 Stat. 483; Pub. L. 112–43, title II, § 205(a), Oct. 21, 2011, 125 Stat. 518; Pub. L. 116–113, title II, § 204(a), Jan. 29, 2020, 134 Stat. 44.)

cite as: 19 USC 1592