Post Entry Amendments and Post Summary Corrections

The nature of the customs entry process is that it lends itself to inaccuracies. Collecting the data for a customs entry is not unlike the game of telephone where the message gets distorted as it passes from one person to the next.

Consider the typical import program.

The importer places an order with a buying agent that places an order with a trading company that places an order with a factory that produces the product and its version of commercial paperwork. The paperwork is passed back to the vendor and the freight forwarder. The vendor generates its version of the commercial invoice and submits it to the forwarder who sends a copy to the importer and the importer's customs broker.

Meanwhile the vendor issued a price increase to the buying agent who sent a message to the import buyer who failed to update the company's purchasing system. The factory had excess materials so, as a favor, they shipped more product than ordered knowing that the buyer had a habit of charging back for quality discrepancies. Receiving didn't catch the overage and received the goods as ordered. The broker wasn't sure of the classification and tried to call the importer for an update but received no response. Need I continue?

Does this sound anything like the reality of your import supply chain? No wonder there are errors within your customs entries! Despite your repeated attempts to coordinate and control customs entry data, humans ultimately get involved and errors occur. Importers, I am assuming you are monitoring the data accuracy of your customs entries. You are exercising reasonable care in this area, aren't you? If you are doing your jobs you are also discovering these errors.

"To err is human, to forgive divine," so said the great poet Alexander Pope. Despite their self image we know that Customs and Boarder Protection (CBP) is not a divine entity. CBP is an earthly agency of the U.S. Federal Government that has its rules regarding errors and omissions within a customs entry. Despite their terrestrial abode CBP rules do permit a certain amount of latitude, which could be interpreted, I suppose, as forgiveness.

When an importer discovers an inaccuracy on an entry an importer is obliged to report that inaccuracy to CBP. Remember the declaration that appears on the bottom of the entry summary CBP form 7501 that states:

I also declare that the statements in the documents herein filed fully disclose to the best of my knowledge and belief the true prices, values, quantities, rebates, drawbacks, fees, commissions, and royalties and are true and correct, and that all goods or services provided to the seller of the merchandise either free or at reduced cost are fully disclosed. I will immediately furnish to the appropriate CBP officer any information showing a different statement of facts.

To report errors importers may use the Post Entry Amendment (PEA) process. The details regarding this process are found at the CBP website.

The site includes an example of a Post Entry Summary form along with a list of frequently asked questions. Briefly summarized, the PEA process is the method by which importers and their brokers can amend unliquidated entries. A PEA must be submitted as either an individual amendment letter (also known as a single PEA) upon discovery of an error or on a quarterly tracking report. The type of PEA, single or quarterly, will depend on the type of error corrected.

Single PEAs

All single PEAs must be filed at least 20 working days prior to the scheduled liquidation date of the entry summary. Single PEAs submitted after the 20th day will be rejected and returned to the filer as an "untimely submission." (Liquidation normally occurs at 10 months or 314 days.) Only one entry summary may be submitted with each PEA coversheet.

The single PEA process cannot be used for informal entry summaries nor can it be used to delete or cancel an entry.

Quarterly Tracking Report

Quarterly reporting can only be submitted for non-revenue PEAs or PEAs with a bill or refund resulting in under $20 and a value below $10,000. The quarterly tracking report must be submitted on a spreadsheet. It should contain the same data elements that are on the post summary adjustment coversheet, with an additional element indicating in which quarter the error was discovered. The report must be submitted 15 calendar days from the last day of the quarter.

Could filing a PEA trigger a CBP penalty or audit?

Filing of the occasional PEA should not trigger an audit. Routine and frequent PEA filings, however, might demonstrate a pattern of serious internal control weaknesses within the importer's program and, yes, these might trigger an enforcement action from CBP. Nevertheless importers have an obligation to ensure accuracy within their entries.

As troublesome as entry errors can be, compliant importers view them as opportunities to improve the controls within an import program. They learn to track and analyze the types and causes of errors. They realize that repetitive errors are a weakness in their control systems that require a fix. These could be as simple as personnel training issues or more complex such as computer system upgrades. Compliant importers also learn to audit 7501 entry summary data prior to submission to CBP thereby minimizing usage of the PEA process.

Is there no other way?

As of June 2011, CBP has released functionality within the Automated Commercial Environment (ACE) system for entry summaries filed through ACE. The Post Summary Correction (PSC) is the automated version of the PEA process. A summary of the PSC was released with the June 2011 ACE update memo from CBP.

According to the Federal Register notice released on June 24, 2011, entry summaries filed using the ACE system must be corrected using the new PSC process. Effective September 22, 2011, PEA will no longer be accepted for entry summaries filed via ACE. The Federal Register notice also extends the PEA process another three years until June 24, 2014. With this new functionality CBP has made it simpler for importers and their broker's to make corrections when there is an error.

Perhaps there is a smidgen of divinity in CBP after all.