US Customs Surety Bond
Customs bonds are a specific type of surety bond which is required of individuals who are importing merchandise into the U.S. The purpose of the bond is to ensure that the importer pays all taxes, fees, and duties in a timely manner, and if this does not happen, a claim can be made against that bond, so that any or all of those fees can be obtained.
Since it is basically a surety bond, it has the same model as all sureties do, in that it takes the form of a contract between three parties, the bond purchaser or the principal, the obligee, which is the protected party (U.S. Customs), and the surety company, which is the bond-issuing firm. The principal in this model is the individual purchasing the bond and importing goods into the country. The obligee would be the party collecting the taxes, duties, and fees associated with the imported merchandise.
The surety company is one which sells insurance and bonds to individuals or businesses, and this firm would be responsible for paying the amount of any claim made against the principal for defaulting on required payments. In turn, the surety company would then seek reimbursement from the principal for the amount of those defaulted payments, since the principal would have been responsible for triggering the claim which was made.
Customs Bond Types
When purchasing a US customs bond, there are two main types which can be bought – a continuous bond, and a single-entry bond, and the difference between the two primarily centers around how frequently you intend to import goods into the U.S. Just as you might expect, the single entry bond would be adequate for the purpose if you intend to only import goods once, or just a few times.
On the other hand, if you expect to be importing on a more or less regular basis, it would be much cheaper to purchase the continuous bond. It’s also advantageous to buy the continuous bond if your business is importing at multiple ports of entry, rather than a single port, because the continuous bond can cover multiple ports.
CBP Form 301
The main governmental body regulating the import of merchandise into this country is the office of Customs and Border Protection (CPB), and that organization requires that importers post a US customs bond, identified as CBP Form 301. On this form, it will be necessary to identify the kind of merchandise which is being imported, fully describing all goods. It will also be necessary to choose the type of US customs bond being applied for, as well as the sum of the bond to be issued, and the required amount will be discussed elsewhere in this document. Looking for a copy of the CBP Form 301? If can be found on the Department of Security Website. Here you go! https://www.cbp.gov/document/forms/form-301-customs-bond.
When is one required?
Anyone who is importing merchandise for the purpose of conducting commerce into this country, which is valued at or above $2,500 must purchase a bond, by law. In addition to the commercial usage, it would also be necessary to purchase a bond if the merchandise falls into the categories of either firearms or food. The only exception to this rule is the case where a customs broker is acting on your behalf, and in that situation, the broker’s US customs surety bond can be used in lieu of your own.
Another scenario where these bonds would be required is if you are an international carrier which moves cargo or passengers to U.S. destinations, by ship, airplane, or vehicle. Similarly, cargo which has already been imported by another firm, but which must be transported between states, will also require that the carrier have a proper bonding.
Warehouse owners who wish to store imported goods are likewise obliged to purchase a bond, in order to legally house such goods. Being a bonded facility, you would then be entitled to store imported goods, and have them exported at a later date, if desired. One other requirement of such storage facilities is that they must be declared to the nearest Port Director, and it must be indicated which type of storage facility is intended.
Finally, it will also be necessary to obtain a US customs surety bond if you intend to carry out any kind of commercial activity in a secure CBP area, for example moving merchandise from one location to another, or if you intend to be a Customs Broker yourself. All the scenarios described above require the posting of a US customs bond in order to be in compliance with rules and regulations issued by the Customs and Border Protection agency, and if that directive is violated, your business would be subject to heavy fines, and possibly other sanctions as well.
Amount of your Bond
When purchasing a single entry bond, the amount would be determined by the port director who will be accepting your bond. This type of single entry bond is generally equivalent to the total value of all your imported merchandise, with taxes, fees, and duties all added into that amount. The exception to this is when the imported merchandise is designated as restricted merchandise, or is in some way subject to requirements of other federal agencies.
In these cases, the amount of the single entry bond must be at least triple the total value of merchandise, cut taxes, fees, & duties. In the case of a continuous bond, the bond amount has to be 10% of the total taxes, fees, & duties which the importer paid last year. If that amount is less than $50,000, then the amount of the continuous bond would default to $50,000.
How a bonding can be obtained
The first step in acquiring your US customs surety bond would be to fill out an application at the port of entry where your merchandise will be imported. That application will involve filling out the CBP form 301, on which you must provide information about the merchandise itself in the sum of your taxes and duties paid to the CBP for the entire prior year. If you have never paid duties and taxes to the CBP before, you will be required to estimate the sum of those areas which you expect to pay in the present year.
You will also be required to choose between a single entry customs bond and a continuous bond. Choosing between the two types of bonds will simply involve projecting out how often you plan to import merchandise. If this is a one-time import, you would only need a single entry bond, whereas if you plan to import regularly, you would need a continuous bond.
After having filled out CBP form 301 and applied for your US customs Bond, you should receive it from the issuing bond agency shortly thereafter. You’ll have to sign the document, make a copy for your personal records, and return the signed copy to the surety company which issued it. At that point, it will be filed with the CBP to satisfy legal requirements. The filing process itself normally takes between one and two weeks. Once the bond goes into effect, you would then become responsible for the payment of any claims made against you, if you should default on prompt payment of all taxes, fees, & duties.
Where to purchase your bond
The best agency to purchase your US customs surety bond from in this country is Surety by NFP, which is the largest and most experienced bond agency in the US. NFP is authorized to operate in all 50 states, and due to the volume of bonds we issue every year, we can offer the most affordable prices on your bond. When you need to purchase US customs bond or any other type of sureties, make sure to contact Surety by NFP before any other company. We’ve been around a long time, and our helpful, knowledgeable, and friendly bonding agents are here to answer any questions you may have. We love explaining how different bonds work, so call or reach out to us today.