What does a Customs Bond do?

A Customs Bond ensures duties are paid. It is a contractual agreement between U.S. Customs and Border Protection, the surety company and the importer of record.

What is a Customs Bond?

Q: When do you need a Customs Bond?

You need a Customs Bond when your imports are for commercial use or when your imports are required to meet federal regulations.

A custom bond provides you with the assurance you need as an importer that your import taxes and fees are paid.

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Customs Bond Definition

A customs bond is a legal agreement that ensures all necessary duties, taxes, and fees are paid to customs when importing commercial goods. Also known as an import bond, CBP requires this when importing goods valued at over $2,500. Imports that contain goods subject to government regulations by agencies such as the FDA are also required to have a customs bond.

When Do You Need a Customs Bond?

There are a number of situations in which you must utilize an import bond. These situations include:

When your imports are for commercial use
When your imported goods are required to meet federal regulations

If the merchandise is subject to government agency rules and regulations, the bond amount must be equal to three times the value.

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.Customs Bonds Ensure Duties Are Paid

A bond is a contractual agreement between the U.S. Customs and Border Protection (CBP), the surety company and the importer of record. So what does a customs surety bond do? It ensures the CBP is paid the duty and taxes owed and that the importer will follow the rules and regulations of the CBP.

An import bond, involves three parties. The importer or business purchasing the bond and importing the goods is the principal. The CBP is the beneficiary. The company issuing the bond is called the surety.

A customs bond guarantees that the taxes, duties and fees are paid on all imports. If the importer cannot pay those costs, the company that issued the customs bond will pay the remaining costs. Reasons an importer might not be able to pay customs fees as required might include closure of a business or bankruptcy.

The importer agrees to meet the following 8 conditions when posting an import bond:

Agrees to satisfy taxes, duties, and other fees in a timely manner
Agrees to finish entry into the country
Agrees to furnish required documents and proof of shipment
Agrees to re-send merchandise if needed
Agrees to fix non-compliance problems with qualifications for admission
Agrees to permit inspection of imported merchandise if deemed necessary
Agrees to reimburse the U.S. for any necessary inspection, handling and storage fees
Agrees to comply with the rules of duty free shipments

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.Explaining the Customs Bond Triangle

The principal purchases a customs bond from the surety and pays a premium, or a percentage of the total bond sum. In exchange, the surety extends the principal surety credit, which essentially confirms that this agreement is going to come through. The principal then follows the terms of the bond from start to finish. If no one files a claim, the principal pays nothing more than the agreed upon bond premium.

.Calculate An Import Bond

Calculate the import bond amount by factoring in the amount of duties and taxes associated with your imported goods. In most instances, the bond amount must be at least 10 percent of the total duties and taxes paid to the CBP annually at a minimum of $50,000.

.Documents You Need During Importing

To achieve an effective and efficient importing process, file the necessary import documents.
These import documents include:

COMMERCIAL INVOICE
The commercial invoice contains transaction details regarding your imports, which include the purchase price, product description, customs clearance number, the country of origin and more.
PACKING LIST
A packing list details your imports, outlining the contents, dimensions and the net weight of each package/container.
BILL OF LADING
A bill of lading lists goods in the form of a receipt and outlines the details of those goods.
ARRIVAL NOTICE
An arrival notice is issued by the carrier’s agent to the consignee and provides detailed information about the arrival and further details required for customs clearance processing.

.Customs Brokers Obtain Import Bonds

Sureties licensed by the U.S. Treasury Department access import bonds. You can find a list of customs brokers broken up by state to learn more. Many licensed customs brokers, though, will not issue you a bond without a power of attorney, which files import entries on your behalf.

Customs brokers can work as agents for sureties, sell bonds and assist you with importing your goods into the United States port of entry of your choice.

.Utilize a Licensed Customs Broker

When you utilize the services of a Licensed Customs Broker, you ensure your bond is correct, complete and you have a secure transaction. Licensed brokers handle the behind the scenes import bond work for you.

Connect with a customs broker that has the experience you need to

handle the details so you can focus on your importing business. These experts can help you increase bond amounts and update contact information. Brokers allow you to focus on your business and avoid importing hurdles.