Understanding U.S. Customs Audits and Assessments

U.S. Customs and Border Protection (CBP) plays a critical role in enforcing trade laws and ensuring that imported goods comply with U.S. customs requirements. One of CBP’s primary enforcement tools is the customs audit and assessment process, which allows the agency to review an importer’s past entries for accuracy and compliance. For importers of record, customs audits can be disruptive, time-consuming, and costly if deficiencies are identified. Understanding how CBP audits operate and how assessments are issued is essential for managing risk and maintaining a compliant import program.

Customs audits and assessments focus on whether importers have properly declared classification, valuation, country of origin, and duty payments. These reviews are not limited to large companies; importers of all sizes may be subject to scrutiny, particularly in high-risk industries or product categories.

Below are key aspects of U.S. customs audits and assessments that importers should understand.

1. Types of CBP Audits and Reviews

CBP conducts several types of audits and compliance reviews. The most comprehensive is the Focused Assessment, which evaluates an importer’s internal controls, policies, and procedures across all import activities. CBP also conducts Quick Response Audits, Targeted Assessments, and Regulatory Audits that focus on specific issues, products, or time periods.


In addition, CBP may initiate Post-Entry Verifications or Requests for Information (CF 28) and Notices of Action (CF 29) to address concerns on individual entries.

2. Common Audit Focus Areas

Customs audits typically examine recurring compliance risk areas. These include tariff classification accuracy, customs valuation (such as assists, royalties, and transfer pricing adjustments), country-of-origin determinations, and eligibility for preferential trade programs.


CBP also reviews the proper use of duty reduction programs, such as free trade agreements and special tariff provisions, as well as compliance with antidumping and countervailing duty requirements. Errors in these areas can result in significant duty underpayments.

3. Assessment of Duties, Penalties, and Interest

If CBP identifies errors during an audit, it may issue assessments for unpaid duties, taxes, and fees. Interest may accrue on underpaid amounts, increasing the financial impact.


In more serious cases involving negligence, gross negligence, or fraud, CBP may pursue penalties under 19 U.S.C. § 1592. Penalties can far exceed the amount of unpaid duties and may be accompanied by heightened scrutiny of future imports.

4. Importance of Internal Controls and Recordkeeping

CBP places strong emphasis on an importer’s internal controls during audits. Companies with documented compliance procedures, employee training programs, and periodic internal reviews are often viewed more favorably.


Federal law requires importers to maintain customs records for at least five years from the date of entry. Inadequate recordkeeping can itself be a violation and may complicate audit responses, leading to adverse findings.

5. Mitigation and Voluntary Disclosure

Importers have opportunities to mitigate audit exposure. When errors are discovered internally, companies may submit a Prior Disclosure to CBP, which can significantly reduce potential penalties.


During an audit, cooperation, transparency, and timely responses to CBP requests can also influence outcomes. In some cases, CBP may allow corrective actions or compliance improvements in lieu of harsher enforcement measures.

Conclusion

U.S. customs audits and assessments are a central component of CBP’s enforcement strategy and a reality of importing into the United States. While audits can be challenging, they are also an opportunity for importers to evaluate and strengthen their compliance programs. By understanding the audit process, maintaining robust internal controls, and proactively addressing potential issues, importers can reduce financial exposure and build a more resilient import operation. Preparation and diligence remain the best defenses against the risks associated with customs audits and assessments.