CBP says your bond is insufficient

What the notice actually says

CBP periodically reviews each bond on file to determine whether it is still adequate to protect the revenue and ensure compliance with applicable law and regulations. If it determines that a bond is inadequate, the principal and the surety are promptly notified in writing, and the principal has 15 days from the date of notification to remedy the deficiency. That is 19 CFR 113.13(c), and the 15 days are published rather than discretionary.

The same paragraph carries the sentence people skip. Where CBP determines that a bond is insufficient to adequately protect the revenue and ensure compliance, it may provide written notice to the principal and surety that, upon receipt, additional security in the form of cash deposit or single transaction bond may be required for any and all of the principal's transactions until the deficiency is remedied. So the risk is not a fine at the end of 15 days. It is that your next entry needs cash or a bond of its own.

There is a faster door as well. Under 19 CFR 113.13(d), if CBP believes that accepting a transaction secured by a continuous bond would place the revenue in jeopardy or otherwise hamper the enforcement of applicable laws or regulations, it may immediately require additional security. Immediately means without waiting out the 15 days.

How CBP arrives at the number

For a standard importer bond, Activity Code 1, the minimum continuous bond amount is $50,000 or 10 percent of the total estimated duties, taxes and fees in the previous 12 month period, whichever is greater, counting all principals, co-principals and users appearing on the bond. It is the greater of the two, which is why a growing duty bill eventually passes the $50,000 floor and does not drop back under it on its own.

The result is then rounded. All continuous bonds are set in increments of $10,000 up to $100,000, and in increments of $100,000 for larger bonds. Not everything you filed feeds the calculation either: certain entry types are excluded from the sufficiency computation, including 05 vessel repair, 11, 12, 26, 31, 32, 34, 38, 47 drawback, 51 and 86. So the 10 percent is not taken on the whole year of activity.

If no imports were made in the preceding year, the bond is set instead on what the principal estimates will accrue over the next 12 months. In no event can the bond amount be less than $50,000.

Why the number moved when your business did not

This is the part that catches people out, and it is usually the real cause. CBP's analytical formula adds amounts on top of the 10 percent figure, based on what is sitting open on your account rather than on what you imported.

If your volume was flat and the bond demand still doubled, start here before you start anywhere else. It is also the only input on this page that you can change by writing a check.

CBP, A Guide for the Public: How CBP Sets Bond Amounts, February 2024, section 6.4.1.4. These add to the 10 percent of duties, taxes and fees figure rather than replacing it.

The route almost nobody uses

Because delinquent bills and debit vouchers push the number up at 100 percent, paying them brings it back down, and CBP says so in the same guide. If the unpaid bills or debit vouchers are paid prior to the deadline to terminate and replace the continuous bond provided in the insufficiency notice, and the Office of Finance Revenue Division is timely notified of the payments, it will recompute the continuous bond amount and take appropriate action.

Two conditions travel with that, and both are easy to miss. The payment has to land before the deadline stated in the notice, and somebody has to tell CBP that it landed. Paying quietly and trusting the file to update itself is how importers end up posting a bond several times the size they needed.

What it costs to do nothing

A single transaction bond is generally set at an amount not less than the total entered value of the shipment, plus all duties, taxes and fees that apply. Two carve-outs exist. For unconditionally duty-free merchandise that is not in the restricted categories, the bond may be an amount equal to 10 percent of total entered value. For entries containing restricted merchandise, the bond amount must equal three times the value of the restricted merchandise, but not less than $100, and the three times is measured on the restricted goods rather than on the whole entry.

Put the two side by side and the stakes are plain. A continuous bond covers a year of imports at 10 percent of a year of duty. Single transaction bonds cover one shipment each, at the full value of that shipment plus its duty, every single time. That is before any cash deposits, and before the days your freight spends waiting for security to be posted.

What CBP is weighing

Sufficiency is not only arithmetic. 19 CFR 113.13(b) lists six criteria, and knowing them tells you which parts of your file are worth fixing before the next review comes around.

• Your prior record of timely payment of duties, taxes and charges.
• Your prior record of complying with CBP demands for redelivery, the obligation to hold unexamined merchandise intact, and other enforcement requirements.
• The value and nature of the merchandise involved in the transactions to be secured.
• The degree and type of supervision CBP will exercise over the transactions.
• Your prior record of honoring bond commitments, including the payment of liquidated damages.
• Any additional information contained in the bond application itself.

Where we are honest about the limits

We cannot make a surety write a bond. If a surety has decided that an importer is too risky, that is the surety's decision, and so is any demand for collateral. Collateral is not CBP's call and it is not ours, and a broker who implies otherwise is telling you what you want to hear.

What we can do is size the bond correctly before CBP sizes it for you, file the replacement so the 15 days are not spent waiting on paperwork, and work the delinquent bill route where that is what actually drove the number up. On a bond pushed up by old bills rather than by growth, that is often the entire answer.

What your notice decides

Everything practical here turns on documents we cannot see. What the notice actually demands, whether it is an increase or a termination and replacement, the date it was issued, your duty, tax and fee total for the last 12 months, and whether anything is sitting unpaid on your account. Those five facts decide whether this is a routine resize or the delinquent bill problem in disguise.

They are also a short conversation. Bring the notice and a year of entry data and the sizing is arithmetic we can do while you are on the phone.