What is Reconciliation?
The reality of modern international trade is that many elements of a transaction may be undeterminable at the time the merchandise is entered. For example, the final value of equipment provided as an assist may not be known until the close of an accounting period, so the correct value of the merchandise is not known until that time.
Reconciliation allows the importer, using reasonable care, to file entry summaries with CBP with the best available information, with the mutual understanding that certain elements, such as the declared value, remain outstanding. At a later date, when the specifics have been determined, the importer files a Reconciliation which provides the final and correct information. The Reconciliation is then liquidated, with a single bill or refund, as appropriate.
In the ACS Reconciliation Prototype, the following issues are allowed Reconciliation:
- Value (Assists, Royalties, etc.)
- HTS 9802 Value
- Certain free trade agreements eligibility (e.g., NAFTA, Chile FTA, CAFTA-DR, Colombia TPA, Korea FTA, Oman FTA, Panama TPA and Peru TPA)
* Because classification is closely linked to the admissibility of merchandise, Reconciliation of classification will be limited to certain situations.
ACS Reconciliation Prototype
Starting October 1, 1998, the ACS Reconciliation Prototype will be the exclusive means to reconcile entries. Existing local block liquidation procedures will no longer be permitted.
CBP has designed a menu approach to Reconciliation. Importers will be able to select the methods which best suit their business needs.
Notifying CBP: Entry summaries may be flagged individually or via a blanket application. The blanket application results in the automatic flagging of all entry summaries for a specified time period.
Filing the Reconciliation: The Reconciliation may be filed with data showing Entry-by-Entry adjustments to duties, taxes, and fees, or with Aggregate data showing only the adjustment without entry-level detail.
- For fiscal control reasons, the Aggregate method will be allowed only when the Reconciliation does not claim a refund in duties, taxes and fees. Similarly, drawback claims against the reconciled amount will not be accepted. (The original underlying entry summaries remain eligible for drawback once the Reconciliation has been filed.) Also, refunds in duties may not be netted against duties owed on a Reconciliation.
How it Works
When an importer files an entry summary while certain elements remain undeterminable, the entry summary is "flagged" (either individually or via a blanket application), thereby providing CBP a "notice of intent" to file a Reconciliation.
The importer is obligated to use reasonable care in filing entry summaries, even when they are subject to reconciliation. For example, importers must provide their best estimates in declared value, rather than using values which bear no relation to the reality of the transaction.
When the information becomes available, the importer files a Reconciliation. A Reconciliation can cover up to 9,999 underlying entry summaries. The Reconciliation is due within 12 months of the earliest entry import date for certain trade agreements (e.g., NAFTA, Chile FTA, CAFTA-DR, Colombia TPA, Korea FTA, Oman FTA, Panama TPA and Peru TPA), or within 21 months of the earliest entry summary date for all other issues.
When the Reconciliation is filed (prior to the end of 12 or 21 months as described above), the payment of additional duties, taxes, fees, and interest (or claim for refund) is made. The Reconciliation is processed, subject to verification, if necessary, and liquidated.
A Reconciliation is treated like any other CBP entry for purposes of liquidation and protest.
Is it Mandatory?
After October 1, 1998, existing local practices for cost submissions and block liquidations will not be permitted. The ACS Reconciliation Prototype will be the exclusive means to reconcile entries. With the following exceptions, it will be mandatory for those importers making post-summary adjustments.
- Importers still have the option of requesting that CBP withhold liquidation on all entries involved, and making adjustments to them individually.
- The Supplemental Information Letter process is still available (see ABI administrative message #97-0727, dated 08/04/1997).
- For importers who were in the midst of a fiscal reporting period on Oct. 1, 1998, the Grandfather Clause policy applies, meaning those importers can finish that reporting period using previous methods. Any new fiscal periods are subject to the exclusive means policy.
Other adjustments (e.g. cost submissions / requests for block liquidations) received outside of the Reconciliation Prototype will be treated in accordance with law, e.g. as Prior Disclosures.
All importers will be allowed to participate in the ACS Reconciliation Prototype. Applications may be submitted throughout the duration of the prototype. The prototype started on 10/1/1998, with an initial test period of two years. It will be extended indefinitely starting 10/1/2000.