Building a US Import Compliance Program from Scratch

Why Every Importer Needs a Compliance Program

Under 19 USC 1484, every US importer of record has a legal obligation to use reasonable care in classifying, valuing, and declaring imported merchandise to CBP. The statute does not define exactly what reasonable care requires — it depends on the complexity of your import operations. But CBP has consistently stated that importers who handle significant volumes, import regulated products, or deal with complex tariff situations should have a formal, documented compliance program. The absence of such a program, when problems arise, is itself evidence of insufficient care.

A compliance program is not just a legal shield — it is an operational asset. Companies with structured programs catch errors earlier, file more accurate entries, pay the correct duty rates, and avoid the disruptions that come with CBP enforcement actions. The investment in building a program is almost always less than the cost of a single significant penalty or focused assessment.

Core Components of an Import Compliance Program

• Written compliance policy: A board-level or executive-level statement committing the company to customs compliance. This sets the tone and provides authority for the compliance function.
• Standard operating procedures (SOPs): Detailed, step-by-step procedures for every import-related process: classification, valuation, country of origin, entry filing, ISF, record-keeping, and broker management.
• Classification management: A systematic process for determining, documenting, validating, and maintaining HTS classifications for all imported products.
• Valuation procedures: Clear rules for determining transaction value, reporting assists, royalties, and other additions to dutiable value.
• Broker oversight: Procedures for selecting, instructing, and monitoring your customs broker to ensure entries are filed accurately.
• Record-keeping: Policies that meet CBP's 5-year record retention requirement under 19 USC 1508, including what records to keep, how to store them, and how to produce them on request.
• Training program: Regular training for all employees involved in the import process — purchasing, logistics, finance, and compliance staff.
• Internal audit program: Periodic self-audits to verify that procedures are being followed and entries are accurate.
• Corrective action procedures: A process for identifying errors, determining root causes, filing corrections or prior disclosures, and implementing preventive measures.
• Organizational structure: Clear assignment of compliance responsibilities, including a designated compliance officer with authority and resources.

Step 1: Assess Your Current State

Before building a compliance program, you need to understand where you stand today. Conduct a baseline assessment that covers: your import volume and product mix, the complexity of your tariff classifications, your current error rate (pull a sample of recent entries and verify them), your broker relationship and oversight level, your record-keeping practices, and any past CBP interactions (CF-28s, CF-29s, penalties, or audits). This assessment identifies your highest-risk areas and helps you prioritize where to build procedures first.

Step 2: Build Your Classification Management System

Classification is the single highest-risk area for most importers, and it should be the first procedure you formalize. Your classification management system should include: a product classification database that maps every SKU or product family to its HTS code with supporting documentation (ruling letters, GRI analysis, chapter note references), a process for classifying new products before the first import, periodic review and validation of existing classifications (at least annually or when tariff changes take effect), and a clear escalation path for difficult classifications.

Step 3: Establish Broker Oversight Procedures

Your customs broker is a critical partner, but they are your agent — not a substitute for your own compliance. Broker oversight procedures should include: written broker instructions that specify how to classify, value, and enter your products; regular review of broker-filed entries against your classification database; periodic meetings with your broker to discuss compliance issues, tariff changes, and process improvements; and clear communication channels for handling exceptions, holds, or CBP inquiries. CBP has stated that simply telling your broker to 'handle it' does not satisfy the reasonable care standard.

Step 4: Implement Training

• Compliance staff: Detailed training on HTS structure, GRI rules, valuation methods, entry procedures, and CBP regulations. At least 40 hours annually.
• Purchasing and sourcing: Training on how purchasing decisions affect duty rates, country of origin, and trade program eligibility. Focus on collecting accurate product and supplier information.
• Logistics and shipping: Training on ISF requirements, entry timing, examination procedures, and document requirements.
• Finance: Training on duty payment procedures, drawback, reconciliation, and record-keeping requirements.
• Senior management: Annual briefing on compliance program status, risk areas, and regulatory changes.

Step 5: Set Up Internal Audits

Internal audits are the engine of continuous improvement in your compliance program. At minimum, conduct quarterly transaction testing — pull a random sample of entries (at least 5% of volume or 50 entries, whichever is greater) and verify that the classification, value, country of origin, and other declarations are accurate. Document findings, calculate your error rate, and track trends over time. If you find errors, determine whether they are isolated mistakes or systemic issues, and take corrective action accordingly. An improving error rate demonstrates to CBP that your compliance program is working.

Step 6: Document Everything

A compliance program that exists only in practice but not on paper provides limited protection. CBP expects to see written policies, documented procedures, training records, audit results, and corrective action reports. When CBP conducts a focused assessment, the first thing they ask for is your compliance manual. When they assess a penalty, one of the key mitigating factors is whether you have a documented compliance program. Keep your compliance documentation organized, current, and accessible — it is your primary evidence of reasonable care.

“An import compliance program is not a one-time project — it is a living system that must be maintained, tested, and improved continuously. The importers who invest in compliance do not just avoid penalties; they operate more efficiently, pay the correct duty rates, and maintain a competitive advantage.”

— CBP Trade Compliance Guidance