What is a Customs Bond?
In order to know why you need a customs bond, let’s first look at what actually is a customs bond. A customs bond is an obligation that payment will be made between customs and an importer for expenses incurred in importing a product into the United States. A custom bond is a guarantee of payment of import duties and taxes.
Who needs a Customs Bond and when?
If you are importing merchandise into the United States for commercial purposes that are valued over $2,500, or if a commodity is subject to other federal agencies requirements (ex: firearms or food), you must post a customs bond. If you are an international carrier and transport cargo or passengers from a foreign country to the US, you also need a customs bond. Facilities that store imported or exported goods such as warehouses, also need a customs bond. Finally, customs brokers must obtain a customs bond.
Single-entry Bonds and Continuous Transaction Bonds
The two main types of bonds are single-entry bonds and continuous transaction bonds. As the name implies, single-entry bonds are for one-time use, while a continuous bond covers shipments over a 12-month period. In general, if you are importing only two or three times a year a single bond may be the best option. More frequent shipments will usually save you money if you obtain a continuous bond. Continuous bonds also cover your ISF (import security filing fees) for ocean shipments.
Minimum single-entry bond amounts must be at least the value plus the taxes owed on the shipment. If you have a shipment that needs to meet the requirements of another government agency (ex: food, medical devices, wine), the bond must be at least three times the worth of your goods. Continuous bonds must have a minimum coverage value of $50,000 or 10% of the taxes and fees you paid the previous year. In general, continuous bonds are very cost-effective if you import frequently.
Costs of not having a Customs Bond
The most important reason why you need a customs bond, besides the legal aspects, is the costs you can incur if you do not have one. Without a properly executed bond, your shipment will not clear U.S. Customs. When this occurs, customs agents (CBP) will not only level fines but may deem it necessary to inspect the cargo and hold your shipment for an extended time period. Additional fees will result including storage and inspection costs. If after 30 days from the arrival of the goods, a bond is not provided, the custodian of the cargo can resell the goods after obtaining permission from customs in order to cover their expenses.
Gallagher Transport has been helping importers navigate the customs and import process for over 25 years. Our experienced brokers will explain exactly what type of customs bond you need, and whether it should be single entry or continuous and for what amount.