Customs bonds

A customs bond is a three-party contract on CBP Form 301 between you as principal, a surety approved by the Treasury Department, and CBP. It guarantees that the duties, taxes and fees on your entries get paid, and that you will comply with the conditions attached to them. If you default, the surety pays CBP and then comes to you. The bond buys release, not forgiveness.

You need one for any commercial shipment requiring formal entry, which in practice means a value of $2,500 or more. You also need one at any value if a partner government agency is involved, if the goods fall under a quota, or if they are subject to an antidumping or countervailing duty order. A $900 shipment of cosmetics needs a bond because FDA is in the file, not because of the value.

Single transaction bond

One bond, one entry. The amount is generally the entered value plus the duties, taxes and fees, and often three times the entered value where a partner government agency requirement or a quota applies. Sensible for a genuinely one-off import. It stops being sensible quickly: each one is underwritten separately, so by roughly the fourth or fifth entry in a year you have spent more than a continuous bond would have cost for the whole year.

Continuous bond

One bond, twelve months, every entry at every port, renewing itself until somebody terminates it. The amount is calculated at ten per cent of the duties, taxes and fees you paid in the previous twelve months, with a floor of $50,000, rounded up to the next $10,000 increment to $100,000 and to the next $100,000 increment above that. Nearly everyone importing regularly should be on one.

Why a bond sized two years ago is probably too small

The calculation looks backwards. It reads the duty you paid last year and sets your security for next year. That works when rates are stable, and rates have not been stable. Section 232 now reaches derivative articles and is assessed on the metal content by melt-and-pour origin, Section 301 lists remain in force, and the IEEPA actions sit on top. An importer whose product mix has not changed at all can be paying several times the duty they paid two years ago, on a bond that was sized against the old number.

CBP notices. The bond sufficiency review compares your actual duty against your bond amount and issues a notice giving you a short window to increase it. Miss that window and entry summaries start rejecting for insufficient bond, cargo sits, and the surety cannot underwrite an increase in an afternoon. We would rather run the numbers on our schedule and tell you to go up before CBP tells you to.

Stacking liability, and why the surety asks questions

Every time the amount changes, a new bond term starts. The old term does not close: it stays open until every entry filed under it has liquidated. Most entries liquidate within about a year, but antidumping and countervailing entries can stay suspended for years. So a surety looking at your file is looking at three or four open terms at once, each carrying its own limit. That is stacking liability, and it is why a request for financial statements or collateral on a large bond is underwriting rather than obstruction.

Other bonds we place

• Custodial bonds for bonded carriers, warehouse proprietors, cartmen and container stations, which is what carries an in-bond movement or warehouse entry.
• Temporary importation bonds at double the estimated duty, for goods coming in to leave again.
• Drawback bonds, which are what make accelerated payment of a drawback claim possible instead of waiting for liquidation.
• International carrier and instruments of international traffic bonds for the vessel and aircraft side.

What we need to place one

• Legal entity name and address exactly as the IRS holds them, which is what CBP matches against
• Importer of record number: EIN, SSN or CBP-assigned
• A completed CBP Form 5106 importer identity record
• What you import, from where, and an honest estimate of annual value and duty
• The signed power of attorney

A single transaction bond can usually be in place the same day. A continuous bond takes a little longer because the surety underwrites it, and CBP has to accept it before it can be used. Start it before the cargo is on the water rather than after.