A customs bond is a guarantee from a surety company to the United States government that the importer will faithfully abide by all laws and regulations governing the importation of merchandise into the United States. Any corporation, company or individual who wishes to import goods into the U.S. is required to post a bond or its cash equivalent. The bond is submitted on Customs Form 301. Customs bonds are issued by surety companies. The Treasury Department annually approves insurance companies for the issuance of Federal surety bonds. For a listing of approved surety companies please see the Department of the Treasury’s Listing of Approved Sureties (Department Circular 570).
A bond is not designed or intended to protect the importer. The purpose of a bond is to guarantee that all customs duties, customs penalties, and other charges assessed by U.S. Customs will be properly paid and that all trade procedures will be followed.
WHAT CUSTOMS BONDS DO
Customs bonds provide the following functions:
- Secures deposit of estimated duty and additional duty.
- Secures payment of duty on merchandise left in a bonded warehouse or improperly removed from a warehouse.
- Secures promise to make entry.
- Secures promise to produce any required evidence.
- Secures promise to redeliver conditionally released merchandise.
- Secures promise to bring conditionally released merchandise into compliance with U.S. admission requirements.
- Secures promise to hold conditionally released merchandise intact for examination.
- Secures promise to pay compensation of Customs officers and exonerate Customs officers.
- Secures promise to use merchandise entered free or at a reduced rate in the manner as entitled and to furnish proof of that use.
TYPES OF BONDS
There are two types of bonds: the single transaction bond and the continuous bond. Single transaction bonds cover single importations, and may cost as much as three times the value of the goods depending upon the goods. The bond covers only one import entry. Single importation bonds are used by the importer who conducts very few importations. The second type of bond is the continuous bond. This bond remains in force for one year and must be renewed annually. This bond is useful to the importer who is involved in trade throughout the year. The amount of this bond is usually equal to 10 percent of the total customs duties paid for the previous year or reasonably estimated for the current year, but not less than $50,000.
THE ROLE OF THE SURETY COMPANY
When goods are imported into the United States, the importer is responsible for making the goods available to the U.S. Customs Service for inspection, ensuring that labeling and packaging requirements have been met, making transaction records available for audit and paying estimated or additional duties and fees, where applicable. It is the surety company issuing the bond that guarantees that the importer will comply with U.S. Customs regulations. The surety company will be called on for payment when the importers cannot or will not fulfill their obligations to the United States government. In turn, the surety company is entitled to full recovery of any loss from the importer. If the importer fails to honor the conditions set forth in the bond, the surety company can be obligated to do so in the importer’s place