CBP Insufficiency

Posted on: September 13th, 2018 • In Bond Type: 301-1 - Importer

CBP periodically monitors the sufficiency of active bonds they have on file.  If they find that an active Importer bond is not sufficient according to it’s published directive, which is based on the import activity of the principal, they may do one of two things.  (1) In the event that CBP feels the current bond is grossly insufficient, they may deem the bond immediately inactive and require the bond to be re-written at a higher amount.  (2) CBP could issue a sufficiency letter to the principal requiring the bond to be re-written at a higher amount within 15 days.  Failure to comply with this letter will result in the bond being deemed insufficient and rendered inactive by CBP.

If CBP determines the bond is grossly insufficient and makes the current bond immediately inactive, the principal would need to first terminate the current bond, which could take 15 days to accomplish, and file the new bond for the next day.  In that time, the principal would either need to wait until the new bond takes effect to import or they would need to post single transaction bonds for each entry made.

With respect to the second scenario, here is an example of the process if CBP issues the insufficiency letter allowing 15 days for compliance.  CBP mails a notice to the principal, dated December 1st, indicating that a new bond must be filed at a higher amount no later than December 15th.  Since CBP guidelines do not permit concurrent bonds and requires15 days to terminate an active bond, the insufficiency notice also indicates that the current bond must be terminated by December 31st.  This wording can be confusing; however as long as the termination request is filed by December 15th, the termination date for the current bond would be prior to December 30th.  Once the termination date is input in the CBP database, the new bond at the higher amount may be filed for the next day.  Thereby meeting CBP’s requirement for filing of the new bond by the 15th.

If the termination and new bond were not filed by the deadline, CBP would deem the bond insufficient.  In our example, if the termination request and new bond were filed with CBP on December 23rd and took effect on the earliest possible date, January 7th, the principal would not be able to utilize the current bond until the new bond takes effect.  While the current bond is insufficient the principal would need to wait until the new bond takes effect to import or they would need to post single transaction bonds for each entry made.

Due to the shorter deadline supplied by CBP, it is very important that the principal ensures the mailing address on file with CBP is the correct address as any loss in days could make all the difference in complying with the sufficiency letter.

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