What is a Customs Bond?
A customs bond is something of an insurance policy that makes sure that Customs & Border Protection (CBP) gets paid the taxes and duties due to the US government.
Types of CBP Customs Bonds
Importer Bond
The importer bond is required by the importer of cargo as a guarantee that the imported goods will have the right amount of duty or tax paid. Sometimes known as the Continuous Importer Bond, the Importer Bond has a minimum value of $50,000. This is the most common bond that importers usually have to get.
The costs and underwriting requirements may be determined but not necessarily limited by the following circumstances:
- Cargo subject to countervailing duties or anti-dumping regulations. The applicant may be required to submit the latest year-end financial statements.
- Financial statements may be requested for merchandise that requires compliance with FDA regulations. This would particularly apply if the surety is known to claim duty in regard to the commodity in question, if the bond is more than the minimum amount of $50,000 or if the importer is a foreign entity.
- There are additional goods that may call for the submission of financial statements. Some goods that may trigger a request for such statements include tires, tobacco, solar panels, electronic cigarettes, honey, vehicles, textiles and seafood among others.
What Size CBP Importer Bond is needed?
Importers will typically be required to pay 10% of the fees, duties, and taxes that they paid to the CBP in the previous twelve months. The minimum bond amount that an importer can expect to hold is $50,000. The Customs & Border Protection agency periodically reviews the bonds on file to ensure that they are compliant with laws and regulations and that they are sufficient to cover the revenue expected. If the CBP believes the bond is insufficient, the surety and principal will be notified and the agency will expect the principal to rectify the deficiency in no more than 15 days after the notification is sent.
Custodian Bond
This is a bond that the CBP requires of entities that hold or carry goods that have not yet been cleared into the United States, for entry or export at a later time or place. Entities that may be required to get the Custodian bond include carriers, Central Examination Stations (CES), Container Freight Stations (CFS), general order warehouses, and warehouse owners.
The Bond Amount for the Custodian Bond
The Customs and Border Protection agency will typically determine the amount of bond to be paid. The typical amount is 1.2% of the bond amount every year inclusive of the .2% filing fee. Underwriters will typically require the latest year-end financial statements from the company.
However, it is important to note that the bond amount may vary by the port of entry and it is thus critical to obtain the information before applying for the bond.
International Carrier Bond
The International Carrier Bond is required of operators of airlines, ships, and conveyors of international merchandise. The bond ensures that these entities comply with customs laws and regulations, pay for overtime services and properly manifest their merchandise with regard to the clearance of the vessel/aircraft.
The principal will typically contact the port of entry and ask to be furnished with the specific requirements that they have to comply with so as to be classified as an international carrier. Once their operations have been approved, the CBP will make a prescription of the bond amount to be paid. Note that the minimum amount of the International Carrier Bond is $25,000 and the amount can only be set by Customs.
Annual International Carrier Bonds are typically 1.2% if the bond amount in addition to .2% of the filing fee. Underwriters will typically require the principal to provide the latest year-end financial statements. For entities with multiple operations, the underwriter may ask to be furnished with additional information on why the entity is applying for the international carrier bond.
Other CBP Bond Types
- Drawback Payment Bond – Makes it possible for the importer to get back 99% of the fees and duty paid on imported merchandise once they furnish the CBP with proof that the merchandise was exported.
- Foreign Trade Zone Bond – A foreign trade zone is deemed a non-US territory and hence an importer may manufacture, manipulate, repack and export foreign merchandise without having to pay duties and other related fees.
- Airport Customs Security Area Bond – The bond is a guarantee that the importer will comply with all the regulations and customs laws that apply to airports and other customs security areas in the area. The annual fee is typically 2.25% of the bond amount, which needs to be approved by the CBP. Underwriters will typically require the principal to submit the latest year-end financial statements.
- In‐Bond Export Consolidation Bond – This is a requirement for export consolidators that consolidate consignment for export outside the exportation port. The annual rate is typically 2.25% of the amount charged for the bond, which needs to be approved by the CBP. The underwriters require the export consolidator to furnish them with the latest year-end financial statements.
