U.S. Customs Surety Bonds
Single Entry vs. Continuous Bonds - What's the Difference?
To begin, U.S. Customs and Border Protection (CBP) requires that all importers have a surety bond in place to legally import goods to the U.S. and to comply with all federal regulations. These bonds are essentially an insurance policy for the government guaranteeing that fines, penalties, and duties are paid to the as per
19CFR §113.0-Appendix C to §113 .
All commercial shipments require a bond "to insure that the [Government's] revenue is adequately protected". There are two main types of bonds importers should be familiar with; Single Transaction Bonds, and Continuous Bonds.
1) SINGLE TRANSACTION BOND - refers to a bond that covers one single import transaction. These are most often an ISF Bond or a Single Entry Bond (SEB). The bond value required by CBP can be determined by the following calculation:
Commercial Value of the Cargo + Duty, Taxes and Fees = Bond Value
If an import has an FOB value of $50,000.00 USD and Duty, Taxes and Fees amount to $5,000.00 USD, the total bond value required by CBP will be $55,000.00 USD.
RGF charges a competitive rate of $4.50 USD/$1,000.00 USD Bond value for a single-transaction surety bond.
Using the above example, $4.50 x ($55,000/$1,000) = $247.50 USD charge to the client.
While this is a simple explanation of a bond, it's important to note that if any Partnership Government Agency (PGA) data is required on the entry ( i.e., FDA, EPA, NHTSA, etc.), then the bond value triples. So, a $50,000.00 USD FOB value would now equate to a $150,000.00 bond value requirement with Customs, at a cost jumping to $650.00 for the client.
As you can see, the cost for a single-transaction bond can add up rather quickly depending on the frequency of shipments, commercial value of cargo, and government oversight regulations. These bonds are usually recommended if the importer has fewer than three shipments per year on a case-by-case basis.
*NOTE: Most Sureties only allow up to 5 single-transaction ISF bonds within any 12-month period and will require a continuous bond purchase thereafter.
There are two types of penalties associated with ISF Filing: Incorrect filing and/or Late Filing. While "Incorrect" refers to the accuracy of the information file, "Late" refers to the timing of ISF filing. Each offense for incorrect filing and late filing have individual penalties of $5,000.00 by CBP. If both fines are levied, importer is liable for $10,000.00 in fines. See additional posting for further in-depth details for Importer Security Filing.
Considering the potential loss in revenue up to $10,000.00 for unpaid fines, U.S. Customs requires a bond to be on file for each ISF filing. The bond value of a Single Transaction ISF Bond is equal to the total potential fine at $10,000.00 per ISF filing.
RGF provides a competitive rate for a Single Transaction ISF Bond at $55.00 per Bond. This fee covers the purchase of the bond on behalf of the importer, along with the knowledge and advice available by our experienced staff regarding the rules of filing and ensuring compliance.
2) CONTINUOUS TRANSACTION BOND (CTB) - this type of bond is issued on an annual basis and allows for multiple import transactions throughout the course of the bond term (1 year).
Continuous bonds cover previously described processes (ISF and Surety) and will likely save the client money when multiple shipments are expected. The minimum Continuous Bond value required by CBP is $50,000.00 USD. This bond covers all ISF filings within 1 year of issuance date of bond, as well as all entries filed within that year with a sum value of $500,000.00 USD in duty, taxes and fees. Essentially, a Continuous Bond is valid as long as it represents at maximum, 10% of the value of all duty, taxes and fees paid to CBP within 1 year of issuance.
Value of All Duty Taxes and Fees payable to CBP within 1 year: $500,000.00 USD
Continuous Bond Value Required: $50,000.00 USD
Value of All Duty Taxes and Fees payable to CBP within 1 year: $1,000,000.00 USD
Continuous Bond Value Required: $100,000.00 USD
Depending on the merchandise, RGF secures Continuous Bonds at around $5.00/$1,000.00 USD Bond Value.
Generally, a Continuous Customs Bond is ideal for most clients. The advantages include a low yearly fee, coverage on duty payments on all shipments throughout a 12-month timeframe, and will save money in the long run; especially if the importer plans to have more than two shipments per year. Most Bonds, no matter if Single or Continuous, can be secured instantly. There may be a need to provide financials if a +$200,000.00 Continuous Bond is required which can delay the process a few days.
Our highly trained and experienced RGF Customs Brokers team will always work with our clients to determine their best option, and calculate cost savings as well. We are here to guide you the entire process from start to finish and are happy to answer any questions you may have.