U.S. importers increasingly are involved in complex international transactions in which the actual value of the goods imported cannot be determined at the time of entry into the United States. Determining value can be difficult for several reasons, including pricing adjustments being applied retroactively; production assets, such as molds and dies, owned by the buyers not being factored into production costs; and the cost of engineering performed abroad being added to the cost of imports.
Under U.S. Code Part 1484 (19 U.S.C. Section 1484), an importer of record is required to exercise reasonable care with respect to the declared value of goods, tariff classification, and rate of duty at the time of entry into the United States. Failing to declare the accurate and correct value at the time of entry may result in an importer underpaying duties, leading to costly penalties (see exhibit) and increased risk of an audit by U.S. Customs and Border Protection (CBP).