Busy Season Approaching for ICE Agents

Sing to the tune of “Santa Claus Is Coming to Town”

Coots, J.F. & Gillespie, H. (1934) Santa Claus is Coming to Town [Recorded by B. Springstein ]. On My Hometown [CD, MP3] 1981   MP3  Purchased 9/27/2011 from ITunes.

You better watch out

You better not buy

Better not sell

I’m telling you why

ICE Agents are coming to town.

ICE Agents are coming to town

ICE Agents are coming to town

They’re making their list

And checking it twice

Gonna find out who’s counterfeiting or not

ICE Agents are coming to town.

They know what you’ve been selling

They know when it’s a fake

They know when you’ve been violating laws

So don’t lie for goodness sakes

Oh!  You better watch out

You better not buy

Better not sell

I’m telling you why

ICE Agents are coming to town

ICE Agents are coming to town.

ICE Agents are coming to town

Tis the season for retailers to stock up on inventory; however, the counterfeiters have also been gathering up goodies to sell for the holiday season.   Don’t be fooled, the agents from U.S. Immigration and Customs Enforcement have been watching to see who’s been naughty and nice this year.  

Last week, ICE agents visited the sunny city of Tampa, where they seized over $5 million in counterfeit goods, primarily purses, from a flea market and storage units.  Although no one was charged during the raid, the investigation is ongoing and the goods will eventually be destroyed.  While Santa might like to escape the North Pole for sunny Florida, it’s unlikely he’s using warehouses in Tampa to store legitimate gifts.

In Washington D.C., ICE agents in plain clothes gathered to identify and seize counterfeit goods at a recent Washington Nationals baseball game.     Baseball caps and shirts were confiscated by the ICE agents.  While Santa has been known to carry a large sack  of goodies, these counterfeiters sold their goods out of black plastic trash bags.

A word to the wise -if someone tries to sell you a genuine item on the street and the price sounds too good to be true – don’t buy it.  ICE is making their list and checking it twice. ICE Is Coming to Town!  Don’t be the person they are coming for!

FCPA Violations - Not For the Lazy Whistleblower

The Dodd-Frank Wall Street Reform and Consumer Protection Act provides protection and financial rewards for whistleblowers who report violations of the securities laws to the SEC. The whistleblower could receive 10% to 30% of the total amount of monetary penalties collected in sanctions that exceed $1,000,000. This is important information for organizations involved in international trade because the new legislation expands the coverage to include violations of the Foreign Corrupt Practices Act.

With increased enforcement actions, imposition of higher fines and the poor economy, the financial incentive could encourage more whistleblowing. From this group, there will be a few people interested in doing the right thing, some who are only in it for the money, a few disgruntled people who want to get even with former employers and finally a few people doing it for some combination of those reasons.

Let’s look at some potential awards. A recovery for the lowest penalty of $1,000,000 would result in a payment to the whistleblower of $100,000 to $300,000. Let’s look at the award based on $320 million, based on the top ten penalty amounts issued against corporate entities from 2008 to 2011. If an individual had been responsible for reporting a violation in the average penalty range, he or she might have received $32,000,000 to $96,000,000. Would a payment of $100,000 be worth becoming a whistleblower? How about $96,000,000?

This sounds like a great deal; however, the whistleblower will have to jump through a few hoops; it’s not going to be as easy as calling up the government, telling your story and picking up your check. Regardless of the so-called protections, the whistleblower should think about future job prospects. In addition to gathering the data to support the claim and making the decision to blow the whistle, the filer will need to complete a little government document known as the Tip, Complaint or Referral Form. Form TCR or SEC2850 is a 17-page document that must be completed by the whistleblower. On the positive side, only six pages require completion, but the filer should read the 11 pages of instructions first.

In addition to the standard personal information, the form requests some of the following information. Note that additional sheets may be required which increases the length of the original 17-page document.

• Explanation of the facts related to the alleged violation and why the filer believes the acts constitute a violation.
• Description of documents in the filer’s possession that support the complaint.

• Location of additional supporting documents not in the filer’s possession.

• Description of how the filer obtained the supporting information.

The one easy thing about the process is that the FCPA whistleblower can bypass the company and take their story directly to the government. There are some issues related to loyalty. Obviously, corporations believe that employees owe the company an opportunity to fix the problem before running to the government. The other side of that argument is that companies aren’t so loyal to their employees these days and the employee reporting a violation could end up on the street without any job or reward. Perhaps companies should offer their own rewards to encourage employees to report violations.   Think about it!  The plan promotes loyalty and trust between the employee and employer,  the company may receive a lesser penalty amount for self-disclosure to the government and the government doesn't have to pay any penalties to a whistleblower. Offering rewards for internal reporting and self-disclosure to the government sounds like a win-win solution for all parties, including the government.

COAC Meeting - October 4, 2011

The next meeting of the Advisory Committee on Commercial Operations of Customs and Border Protection “COAC” will be held in El Paso, TX on October 4, 2011 from 1 p.m. to 6 p.m.

The meeting is open to the public; however, attendees must register in advance. Click HERE to register for on-site or webcasting attendance. 

Agenda

The Committee will discuss and formulate recommendations on the following issues:

• The work of the Global Supply Chain Security: Land Border Security Initiatives Subcommittee.
• The work of the Role of the Broker, a Broker Revision Project.
• The Center of Excellence and Expertise (CEE) Pilot, Account Executive Pilots and Work of the Simplified Entry and Financial Processing Work Group.
• The work of the One U.S. Government at the Border Subcommittee. 

The public is invited to comment on the preceding four issues. CBP requests that comments be submitted in writing no later than September 27. Click HERE to review the Federal Register for instructions.

The COAC will receive an update and discuss the following CBP Initiatives and Subcommittee issues:

• Update on the Work of the Air Cargo Security Subcommittee.
• Update on the Work of the Automated Commercial Environment (ACE).
• Update on the Work of the Antidumping/Countervailing Duty Subcommittee.
• Update on the Work of the IPR Enforcement Subcommittee.

Weekly Classification Question – September 19, 2011

Since many of you are preparing for the October 2011 Customs Broker Exam, we wanted to provide our readers with some challenging classification questions. Last week's question covered the definition of a steel alloy and the answer and explanation can be found at the end of this article, after this week's new question.

Classify a platinum plated, sterling silver set containing a dozen each of forks, knives and spoons.

A. 7114.11.4500
B. 7114.19.0000
C. 7114.20.0040
D. 8215.10.0000
E. 8215.91.9000


______________________________________________________

Answer to September 12, 2011 Question

Answer: D

See: HTSUS CH72 Note 1(f)

Since the question requires information based on a definition, we know that these issues are usually provided in the Section and/or Chapter Notes. So, now we need to go find the section and chapter that pertains to steel to find the definition that will help us answer the question. Section XV covers base metals, but a quick review does not provide the information we need. Chapter 72 also covers steel and Note 1(f) provides information related to alloys of steel that are not stainless. Comparing our list of answers and the list in Note 1(f), we find that Answer E is the only one that meets the requirements.

Happy Passport Day - September 17

 

Since 9/11 and the implementation of the Western Hemisphere Travel Initiative, all U.S. and Canadian citizens must present a secure travel document when entering the U.S.  On Saturday September 17, the Department of State is hosting “Passport Day in the USA.”   Domestic passport agencies and many passport application facilities such as post offices and court clerk’s offices will be open for the public to apply for passports or passport cards.  No appointment is necessary. The passport book is required for air travel; however, the passport card can be used for land and sea ports.  

Click HERE to find a location near you.  Be sure to bring evidence of U.S. citizenship in one of the following formats. 

• Previously issued, undamaged U.S. Passport
• Certified birth certificate issued by the city, county or state Consular Report of Birth
• Abroad or Certification of Birth
• Naturalization Certificate
• Certificate of Citizenship

Click HERE for a list of documents and other information you will need to complete the process.

Prepare for Increased MPF

The proposed increase in the Merchandise Processing Fee “MPF” from .21% to .3464% cleared another hurdle as it passed in the House and is on its way to the Senate.    

Why should you care about an increase?

The Merchandise Processing Fee is authorized under 19 U.S.C. 58c, and is used to offset the costs of processing merchandise entering the United States. Imported merchandise formally entered or withdrawn from a warehouse for consumption, is currently subject to payment to CBP of an “ad valorem” fee of 0.21% of the total value for the shipment.  The minimum fee is $25 and the maximum fee is $485 on formal entries.  Informal entries, those generally valued under $2,000, are subject to a flat $2 MPF if the entry of the shipment is automated. 

Check out the chart for a comparison of MPF calculation comparisons using the current MPF and the proposed MPF. Assume that the calculations are based on imports from a country not subject to reduced MPF rates resulting from a free trade agreement.  How will this affect the amount of fees you pay on entries?  Assuming that the $485 cap remains the same, the increase will not have much impact on high value importers.  You may want to review the average entered value of shipments to determine how much this change impacts your bottom line.  Although it would be extremely unpopular with importers, the government could have collected more money if they considered an increase to the maximum MPF payable of $485 per entry.

Value	Current MPF 0.21%	MPF Due	Proposed MPF 0.3464%	MPF Due	Increase
$       500	$2 Informal	$2	$2 Informal	$2	None
$    5,000	$5,000 x .21% = $10.50	$25	$5,000 x .3464% = $17.32	$25	None
$  15,000	$15,000 x .21% = $31.50	$31.50	$15,000 x .3464% = $51.96	$51.96	$20.46
$  50,000	$50,000 x .21% = $105	$105	$50,000 x .3464% =$173.20	$173.20	$68.20
$100,000	$100,000 x .21% = $210	$210	$100,000 x .3464% = $346.40	$346.40	$136.40
$250,000	$250,000 x .21% = $525	$485	$250,000 x .3464% = $866	$485	None

HTML Tables

Weekly Classification Question – September 12, 2011

Since many of you are gearing up for the October 2011 Customs Broker Exam, we wanted to provide our readers with some challenging classification questions.  Last week's question covered baseball caps and the answer and explanation can be found at the end of this article, after this week's new question. 

Steel that doesn’t meet the definition of stainless steel is considered an alloy if it_______________.

     A.   Is coated with zinc

     B.   Contains 0.080 percent carbon by weight

     C.   Contains 0.003 percent lead by weight

     D.   Contains 0.02 percent nickel by weight 

     E.   Contains 0.3 percent tungsten by weight

 _________________________________________________

Answer to September 5, 2011 Question

Answer: B

The question tells us that the we have:

1.     Baseball Cap

2.    Cotton

3.    Woven

4.    Detachable plastic sunglasses.

GRI 3(b) states that composite goods consisting of different materials or made up of different components are to be classified as if they consisted of the material or component which gives them their essential character.  The baseball cap imparts the essential character because the cap can be worn whether or not the sunglasses are used.  The use of GRI 3(b) eliminates Answers C, D and E.  Answer A is eliminated because the provision covers felt hats.

Weekly Classification Question – September 5, 2011

Since many of you are gearing up for the October 2011 Customs Broker Exam, we wanted to provide our readers with some challenging classification questions.  Last week's question covered glassware and the answer and explanation can be found at the end of this article, after this week's new question. 

Classify a blue woven cotton baseball cap that contains detachable plastic sunglasses.

A. 6505.90.0800

B. 6505.90.2590

C. 9003.19.0000

D. 9004.10.0000

E. 9004.90.0000

__________________________________________________________________________

Answer to August 29, 2011 Question

Answer: C

Answers A and B are incorrect because Chapter 70 Subheading Note 1 defines lead crystal at 24% and our glasses are 22% by weight.  It’s also important to know that stemware includes wine glasses.   We also need to note that there are four glasses in each box and the box of four glasses is valued at $8.00.  This means that each glass is valued at $2.00 each. 

Answer D is incorrect because it includes glasses that are valued over $5.00 each.

Answer E is not correct because it provides for other drinking glasses (not stemware) valued over $5.00. 

Answer C is the best answer because it provides for stemware valued under $3 each.

Check Out Border Wars

The new season of Border Wars premieres on Sunday September 4, 2011, with a special edition about the process seized goods go through at 9:00 pm Eastern, followed by the debut episode for the new season at 10:00 p.m.

You can find the show on the National Geographic Channel. Click HERE to view the website. Explore previous episodes and enjoy a simulation where you can pretend to be a border agent for the day!