The Daily Workings of Drawback Simplification

1. The Daily Workings of Drawback Simplification Anne-Marie Bush Veritrade International ambush@veritradeusa.com Presented at WESCCON 2006 October 21, 2006

2. The Types • HTS to HTS/Schedule B match with “lesser of, double average” • HTS shift with change record using only average of the import line item • Same Condition Direct Identification to Canada and Mexico • Destruction Direct Identification

3. Sanctity of the Line Item • For both Imports and Exports • Average of line item used to calculate the “lesser of” • SO, three elements will need to be correct for every line • HTS/Schedule B# • Value • Quantity – what if there is no reporting qty or is different from the units of sale?

4. Correcting Entries and AES • Can not be “close enough” • There is no de minimus • All line items have to be correct if used for drawback • If not, you will get a call to correct • or, you will see a correction done by someone else

5. Potential Fall Out • Any corrections will show up as errors in the Broker Compliance Report • If you make a PSC on a line that has been used in a claim, the drawback claim may be invalid • Any error/penalty on the claim will affect both the claimant AND the importer

6. Importer Liability • The Importer is now liable even if they are not the claimant • If Broker shown as Importer of Record, they will be liable even if not claimant • Importer will not be informed if their line item is used on a drawback claim

7. AES for All – Proof of Export • In order to claim, must have AES line item • Even if value of line item is <$2500, it must still be reported • OBL’s and AWB’s will still be required to prove the proof of export • Shipper vs. USPPI – who can claim?

8. First Come, First Served • If a drawback claim is filed before a PSC, and you are expecting a refund, you won’t get it. • By changing the import line item, the drawback claim will now be invalid • CBP may not be able to process the PSC

9. ACE Portal • If claimant is not the importer, someone will have to update the ACE Portal and designate an import line item for use by different party • Not necessary for export line item • This will replace Certificates of Delivery and will now be “private” transaction • CBP “shall not be required to verify”

10. When Should You Start • Effective date for Drawback Simplification is the date ACE is the system of record for imports • If the import you want to use for an export is before that date, than the old methods apply • If the import is after, than the new methodology • Can not combine both methods on one claim

11. Exports to Canada / Mexico • Still Same Condition Direct Identification by Part # • Will not be able to combine Part # with Line Item methodology, need two distinct programs • If use Accounting Method than must use 5 year inventory, not the current 3 years • But you can’t combine ACE and pre-ACE entries • Result – the day ACE starts any exports to Canada/Mexico will be unclaimable by accounting method AND will have to wait for ACE to have been in effect for 5 full years before can start claiming

12. Destruction • Use Direct Identification or approved accounting method • Will use average of import line item