Traditionally, the U.S. government has focused on import compliance issues such as misclassification and transshipment. However, recently, there has been a more stringent effort against exporters that unlawfully try to help foreign customers avoid duties in their home countries. Enforcement activities have found discrepancies including inaccurate valuation and other violations of U.S. Customs and trade rules—covering areas like counterfeiting, bribery, price fixing and money laundering.

Export valuation compliance is an area that is often overlooked, even by reputable exporters. Many companies are unaware that they are legally required to submit accurate valuation information for exports, as well as imports. In a typical scenario, the U.S. seller seeks to accommodate its foreign buyer by authorizing the issuance of a shipper’s export declaration reflecting values lower than the amount actually paid to the seller, as indicated on the invoice. The customer then enters the goods at this lower value; thus fraudulently reducing the amount of duties, taxes and value-added taxes owed to the foreign government. Since U.S. exporters usually declare the amounts actually paid by their customers for accounting and tax purposes, they may incorrectly assume that this under-valuation is in compliance with U.S. law.

Considering the heightened scrutiny and the substantial penalties that can result from under-valuation practices, U.S. exporters are advised to review their trade activities. As part of their compliance standards and controls under Sarbanes-Oxley, exporters should independently verify that the amounts indicated on their Shippers Export Declarations (SEDs; 7525-V) and other export documents accurately reflect the amounts paid by their foreign customers.

Deringer's consulting & regulatory affairs group offers a full scope of services to support importers/exporters, carriers, and supply chain partners. For more information regarding this advisory, please call 518-297-3511, or email us at consulting@anderinger.com.