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What is a CBP Bond ? A CBP bond is a contract that is given to insure the performance if an obligation imposed by law or regulation. The most common use of a CBP bond allows importers to take possession of their goods before all CBP formalities are complete. Another use allows a carrier to move goods under bond from one place to another before those goods are actually entered for consumption with duties paid. Who are the parties to a Custom Bond ? All Customs bonds are financial guarantees between 3 parties: the Insurance/Surety company issuing the bond, the Principal (who is required to file the bond), and Customs & Border Protection (CBP). The bond guarantees Customs & Border Protection that if they cannot collect monies due from the Principal they can seek remedy, up to the bond amount, from the Insurance/Surety Company. The bond also compensates the Insurance / Surety Company, allowing them to use any legal means to collect from the Principal any monies that were paid to CBP on the Principal’s behalf. All parties that import goods into the United States for commercial purposes or transport goods through the United States must have a CBP bond. The principal on a bond can be an importer, a broker, a carrier, a bonded warehouse proprietor, a foreign trade zone operator or anyone that seeks to do business with CBP. The surety is usually an insurance company that has been authorized to write bonds. The surety and the principal are known as the bond obligors while the CBP is the beneficiary on all authorized bonds. If a principal fails to execute its obligations, CBP can make a claim against the principal and surety under the terms of the bond What formalities are associated with a Customs bond ? All CBP bonds must be in writing. To prevent errors from occurring, there must be a witness present when the signature of the bond obligor is signing as an individual. When a corporation needs to sign a CBP, it allows a corporate officer (who has power of attorney) to sign for it. No witnesses are needed when bonds are completed by authorized officials. What are the types of bonds ? Continuous Transaction Bond is a self-renewing term Importer Entry Bond, which covers all Customs transactions through all ports of the country. The bond amount for a continuous bond is determined by taking multiples of $10,000 nearest 10% of duties, taxes and fees paid by an importer during the last calendar year. The minimum continuous bond amount is $50,000. This bond is valid until it is terminated by the principal or the surety. Single Entry Bond is a one-time Importer Entry Bond for a particular import shipment, which can only be used for one Customs transaction. The bond amount for a single transaction bond is equal to the total entered value of the merchandise plus all duties, taxes, and fees. However, if the merchandise is subject to other government agency requirements or visa/quota requirements, the bond amount would be equal to three times of the total entered value. Drawback Payment Refunds allows an importer to obtain a refund of 99% of the duties paid on imported goods upon providing proof these goods were exported. Custodian of Bonded Merchandise covers the activities of bonded merchandise warehouses, carriers and container stations. All of these business types are responsible in the course of their activities for merchandise which has not yet been entered into the commerce of the United States and on which duties are still due. Such goods are referred to as being in-bond. International Carrier Bond ensures operators properly manifest all goods and passengers they carry, pay for the overtime services of Customs officers and comply with all regulations related to the clearance of their vehicles. Foreign Trade Zone is considered non-U.S. territory for Customs’ purposes and foreign goods placed into the FTZ may be manufactured, manipulated, repacked or exported without paying duties. What are the obligations of the parties ? An importer's bond obligations require him to pay duties and submit entry summary documentation at the times required by law and to redeliver merchandise to CBP upon lawful demand. The basic custodial bond requires that the custodian of bonded merchandise comply with regulations relating to such merchandise and produce records upon demand by a CBP officer. If obligations are not met then CBP may access a claim against the prinicpal and surety under the terms and conditions of that bond. If the bond principal cannot or will not perfom its obligations then CBP can make demand for payment on both the prinipal and the surety. Where can I get a bond ? You can visit http://www.fms.treas.gov/c570/index.html . Here you will find the Treasury Department Circular 570 which is a list of Treasury approved certified surety companies. Where are CBP bonds filed ? Single entry bonds should be filed in the port where the transaction is taking place. the Continous Transaction Bond program is being centralized at the Revenue Division In Indianapolis, Indiana. Must Surety Bonds always be used ? Surety Bonds don’t always have to be used. An alternative is for the bond principal to pledge cash or other United States obligations such as notes, bonds (other than U.S. savings bonds) and treasury bills. The bond form will then be changed to show the switch from a surety to a pledge of assets. If any of the examples above are pledged then the bond principal is entitled to the interest or discount. In addition, no interest is paid on pledged cash. One disadvantage to this is the CBP must hold the pledge until the bond is completed or canceled. Where can further information be obtained ? For any other information on CBP bonds please visit www.cbp.gov
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