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UPDATED: 5/7/05
 

Customs Audit Procedure

19 U.S.C. § 1509

     (a) Authority.  In any investigation or inquiry conducted for the purpose of ascertaining the correctness of any entry, for determining the liability of any person for duty, fees and taxes due or duties and fees and taxes which may be due the United States, for determining liability for fines and penalties, or for insuring compliance with the laws of the United States administered by the United States Customs Service, the Secretary (but no delegate of the Secretary below the rank of district director or special agent in charge) may--

     (1) examine, or cause to be examined, upon reasonable notice, any record (which for purposes of this section, includes, but is not limited to, any statement, declaration, document, or electronically generated or machine readable data) described in the notice with reasonable specificity, which may be relevant to such investigation or inquiry, except that--

                 (A) if such record is required by law or regulation for the entry of the merchandise (whether or not the Customs Service required its presentation at the time of entry) it shall be provided to the Customs Service within a reasonable time after demand for its production is made, taking into consideration the number, type, and age of the item demanded; and

                 (B) if a person of whom demand is made under subparagraph (A)fails to comply with the demand, the person may be subject to penalty under subsection (g);

     (2) summon, upon reasonable notice-- 

                 (A) the person who--

                     (i) imported, or knowingly caused to be imported, merchandise into the customs territory of the United States,  

                     (ii)  exported merchandise, or knowingly caused merchandise to be exported, to a NAFTA country (as defined in section 2(4) of the North American Free Trade Agreement Implementation Act) or to Canada during such time as the United States-Canada Free-Trade Agreement is in force with respect to, and the United States applies that Agreement to, Canada, 

                    (iii) transported or stored merchandise that was or is carried or held under customs bond, or knowingly caused such transportation or storage, or  

                     (iv) filed a declaration, entry, or drawback claim with the Customs Service; 

                (B) any officer, employee, or agent of any person described in subparagraph (A);

                   (C) any person having possession, custody or care of records relating to the importation or other activity described in subparagraph (A); or 

                  (D) any other person he may deem proper;

   to appear before the appropriate customs officer at the time and place within the customs territory of the United States specified in the summons (except that no witness may be required to appear at any place more than one hundred miles distant from the place where he was served with the summons), to produce records, as defined in subsection (c)(1)(A) , (d)(1)(A), and to give such testimony, under oath, as may be relevant to such investigation or inquiry; and  

   (3) take, or cause to be taken, such testimony of the person concerned, under oath, as may be relevant to such investigation or inquiry.

       (b) Regulatory Audit Procedures.-- 

               (1) In conducting a regulatory audit under this section (which does not include a quantity verification for a customs bonded warehouse or general purpose foreign trade zone), the Customs Service auditor shall provide the person being audited, in advance of the audit, with a reasonable estimate of the time to be required for the audit. If in the course of an audit it becomes apparent that additional time will be required, the Customs Service auditor shall immediately provide a further estimate of such additional time.  

             (2) Before commencing an audit, the Customs Service auditor shall inform the party to be audited of his right to an entry conference at which time the purpose will be explained and an estimated termination date set. Upon completion of on-site audit activities, the Customs Service auditor shall schedule a closing conference to explain the preliminary results of the audit. 

               (3) Except as provided in paragraph (5), if the estimated or actual termination date for an audit passes without the Customs Service auditor providing a closing conference to explain the results of the audit, the person being audited may petition in writing for such a conference to the appropriate regional commissioner  officer designated pursuant to regulations, who, upon receipt of such a request, shall provide for such a conference to be held within 15 days after the date of receipt.

                (4) Except as provided in paragraph (5), the Customs Service auditor shall complete the formal written audit report within 90 days following the closing conference unless the appropriate regional commissioner  officer designated pursuant to regulations provides written notice to the person being audited of the reason for any delay and the anticipated completion date. After application of any exemption contained in section 552 of title 5, United States Code, a copy of the formal written audit report shall be sent to the person audited no later than 30 days following completion of the report. 

               (5) Paragraphs (3) and (4) shall not apply after the Customs Service commences a formal investigation with respect to the issue involved.

      (c) Service of summons.  A summons issued pursuant to this section may be served by any person designated in the summons to serve it. Service upon a natural person may be made by personal delivery of the summons to him.  Service may be made upon a domestic or foreign corporation or upon a partnership or other unincorporated association which is subject to suit under a common name, by delivering the summons to an officer, or managing or general agent, or to any other agent authorized by appointment or by law to receive service of process.  The certificate of service signed by the person serving the summons is prima facie evidence of the facts it states on the hearing of an application for the enforcement of the summons. When the summons requires the production of records, such records shall be described in the summons with reasonable specificity.

      (d) Special procedures for third-party summonses. 

     (1) For purposes of this subsection--

      (A) The term "records" includes those-- 

     (i) required to be kept under section 508 (19 U.S.C. § 1508) ; or 

     (ii) regarding which there is probable cause to believe that they pertain to merchandise the importation of which into the United States is prohibited.

      (B) The term "summons" means any summons issued under subsection (a) of this section which requires the production of records or the giving of testimony relating to records. Such term does not mean any summons issued to aid in the collection of the liability of any person against whom an assessment has been made or judgment rendered.  

   (C) The term "third-party recordkeeper" means--

      (i) any customhouse broker, unless such customhouse broker is the importer of record on an entry

      (ii) any attorney; and 

     (iii) any accountant.

      (2) If--

      (A) any summons is served on any person who is a third-party recordkeeper; and

      (B) the summons requires the production of, or the giving of testimony relating to, any portion of records made or kept of the transactions described in section 508 (19 U.S.C. § 1508)   of any person (other than the person summoned) who is identified in the description of the records contained in such summons; then notice of such summons shall be given to any persons so identified within a reasonable time before the day fixed in the summons as the day upon which such records are to be examined or testimony given. Such notice shall be accompanied by a copy of the summons which has been served and shall contain directions for staying compliance with the summons under paragraph (5)(B) of this subsection.  

   (3) Any notice required under paragraph (2) of this subsection shall be sufficient if such notice is served in the manner provided in subsection (b) of this section upon the person entitled to notice, or is mailed by certified or registered mail to the last known address of such person.

      (4) Paragraph (2) of this subsection shall not apply to any summons-

      (A) served on the person with respect to whose liability for duties, fees, or taxes the summons is issued, or any officer or employee of such person; or

      (B) to determine whether or not records of the transactions described in section 508 (19 U.S.C. § 1508)   of an identified person have been made or kept.

      (5) Notwithstanding any other law or rule of law, any person who is entitled to notice of a summons under paragraph (2) of this subsection shall have the right--

      (A) to intervene in any proceeding with respect to the enforcement of such summons under section 510 of this Act (19 U.S.C. § 1510) ; and

      (B) to stay compliance with the summons if, not later than the day before the day fixed in the summons as the day upon which the records are to be examined or testimony given-- 

     (i) notice in writing is given to the person summoned not to comply with the summons; and 

     (ii) a copy of such notice not to comply with the summons is mailed by registered or certified mail to such person and to such office as the Secretary may direct in the notice referred to in paragraph (2) of this subsection.

      (6) No examination of any records required to be produced under a summons as to which notice is required under paragraph (2) of this subsection may be made--

      (A) before the expiration of the period allowed for the notice not to comply under paragraph (5)(B) of this subsection, or

      (B) if the requirements of such paragraph (5)(B) have been met, except in accordance with an order issued by a court of competent jurisdiction authorizing examination of such records or with the consent of the person staying compliance.

      (7) The provisions of paragraphs (2) and (5) of this subsection shall not apply with respect to any summons if, upon petition by the Secretary, the court determines, on the basis of the facts and circumstances alleged, that there is reasonable cause to believe the giving of notice may lead to attempts to conceal, destroy, or alter records relevant to the examination, to prevent the communication of information from other persons through intimidation, bribery, or collusion, or to flee to avoid prosecution, testifying, or production of records.

        (e) List of Records and Information.--The Customs Service shall identify and publish a list of the records or entry information that is required to be maintained and produced under subsection (a)(1)(A).

  
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