Estimated vs. Actual Duty Costs: CBP Liquidation Explained

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By ABC Customs Brokers, Sep 21, 2016

It is common practice for customs brokers to invoice for projected duty, often listed as “estimated costs,” on the invoice instead of the actual duty payable. Amounts that must actually be paid remain an “estimate” with U.S. Customs and Border Protection (CBP) until “liquidated.” The liquidation process can be lengthy, therefore “estimated costs” are used until such time as the final determination is set by CBP.

According to CBP, liquidation is defined as, “the final computation or ascertainment of duties on entries for consumption or drawback entries.” (Source: 19 CFR §159.1)

The Liquidation Process

Importers are required to declare imported goods to CBP in the form of an entry, often prepared by a customs broker. Based on the value of the goods and H.S. tariff classification, duties and taxes are calculated and paid to CBP either direct by the Importer of Record (IOR), or by the customs broker on behalf of the IOR. CBP will review the entry for duty and tax accuracy (during the pre-liquidation period) and either agree with the calculations as paid or inform the customs broker or IOR of the recalculated amounts and any duties owing or payable. CBP will then liquidate the entry 314 days after entry submission.

Liquidation can be extended upon request, however the IOR must provide reason to do so. CBP is also at liberty to extend this time frame if the duty payable amounts are in question. Extensions are granted in one year increments and cannot be extended more than 3 times.

Anti-dumping and or countervailing duty investigations can cause the liquidation process to be suspended, as can a number of other issues, such as reconciliation entries our outstanding ruling requests.

Many IORs ask how they will know when the liquidation has been completed. Importers will receive a Courtesy Notice of Liquidation on a form 4333A, which utilizes the date of the actual liquidation. This notice requires no further action apart from record keeping requirements. However, if there is additional duty owing, the Courtesy Notice of Liquidation will be pink and if customs has extended or suspended the liquidation, this will be indicated on the form.

While the liquidation of entries may seem like a simple matter, it is important that importers review their liquidation notices for anomalies such as extensions, suspension, changed status, change in amounts due, etc. While the majority of entries do liquidate on schedule and as expected, there can be surprises. Should you receive a liquidation notice that does not match your expectations, get in touch with your customs broker for clarification as soon as possible in order to maintain your legal right to protest the matter should you find it objectionable.