Import Duty Underpayment Case Illustrates Enforcement Efforts
Source
American Shipper
Post Date
04/23/2025
A new civil complaint alleging the underpayment of import duties illustrates federal officials?pledge to make trade a priority in their efforts to enforce the False Claims Act. Under the FCA importers are civilly liable for (1) knowingly making, using, or causing to be made or used a false record or statement material to an obligation to pay or transmit money (e.g., import duties) or property to the U.S. government, or (2) knowingly concealing or knowingly and improperly avoiding or decreasing an obligation to pay or transmit money or property to the U.S. government. Damages of up to three times the amount of money improperly withheld, as well as other penalties, may be imposed. The qui tam provisions of the FCA allow a private party to file an action on behalf of the U.S. and receive a portion of any recovery. The Department of Justice announced April 18 that it has filed a civil complaint against a company, its owners, and overseas companies operated and controlled by the owners alleging that they knowingly and improperly underpaid customs duties by undervaluing imported goods purchased from foreign suppliers. Among other things, the complaint alleges that the defants used a double-invoicing scheme featuring false entry summaries presented to U.S. Customs and Border Protection. The DOJ further conts that the defants continued to underpay customs duties even after a third-party auditor advised them of risks associated with the underpayment of duties and recommed that they double-check duty calculations underlying prices they agreed to with their foreign suppliers. Michael Granston, deputy assistant attorney general for the DOJ? Commercial Litigation Branch, said earlier this year that under the Trump administration ?llegal foreign trade practices?will continue to be a focus for FCA enforcement. High on the list of such practices are efforts to evade the growing list of tariffs imposed on a wide range of imports. Particular areas of concern include undervaluation, misclassification, and false country of origin statements. Importers should therefore act to ensure they have strong trade and customs compliance measures in place so as to withstand increased federal scrutiny and avoid the financial and reputational costs that violations could incur. Conducting an internal compliance review can not only help identify potential vulnerabilities and prompt improved processes and procedures but can also reveal opportunities to lower duties and other costs.
