Prior Disclosure

Definition

A Prior Disclosure is a formal, voluntary notification submitted by an importer to U.S. Customs and Border Protection (CBP) regarding one or more violations that occurred prior to the initiation of a formal investigation by the agency. These disclosures typically involve tendering any loss of duties associated with the identified violation(s).

Core Process

When an error is identified, the importer must conduct a comprehensive review. CBP can look back at prior entries for up to five years, meaning the importer should review all instances that occurred over that period.

• Common issues addressed include misclassification, undervaluation, incorrect country of origin, and incorrectly declared free trade agreements.

• The disclosure must fully quantify the monetary impact of the violation.

Why File a Prior Disclosure

Importers file a Prior Disclosure primarily to mitigate risk and demonstrate trade compliance commitment:

• Show Reasonable Care: Filing the disclosure proactively demonstrates to CBP that the importer adheres to the legal standard of reasonable care in their import operations.

• Penalty Reduction: It significantly reduces the potential fines and penalties that would be administered if CBP were to identify the errors independently through an audit or investigation.

Expert Advice

Submitting a Prior Disclosure requires thorough vetting by a qualified trade advisory team or a trade attorney. This review is essential to ensure that there are no additional, potentially more severe violations that CBP might uncover during their subsequent review. Submitting a Prior Disclosure without properly vetting it exposes the importer to potential penalties that may not fall under the protective provisions afforded by the voluntary disclosure process.