Customs Bond

A customs bond is a specific type of surety bond that is required of individuals who are importing merchandise into the United States. The purpose of the bond is to ensure that the importer pays all taxes, fees and duties in a timely manner. If this does not happen, a claim can be made against that bond, so that any or all of those fees can be collected.

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 (US Customs), and the surety company, 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 that 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.

What are the types of customs bonds?

There are two main types of customs bonds: a continuous bond and a single-entry bond. The difference between the two centers on how frequently you intend to import goods into the US. As you might expect, the single entry bond would be adequate for importing goods one time.

On the other hand, if you expect to be importing on a more regular basis, it would be much cheaper to purchase a 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. A continuous bond can cover multiple ports.

What is CBP Form 301?

The main governmental body regulating the import of merchandise into this country is the office of Customs and Border Protection (CBP), and that organization requires that importers post a US customs bond, identified as CBP Form 301. In this form, it will be necessary to identify the kind of merchandise 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? It can be found on the Department of Security Website. https://www.cbp.gov/document/forms/form-301-customs-bond.

When is a customs bond required?

Anyone who is importing merchandise to conduct commerce into this country, which is valued at or above $2,500 must purchase a bond, by law. In addition to 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 U.S. 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 that 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, 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 U.S. 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 U.S. customs bond to comply with rules and regulations issued by the CBP agency, and if that directive is violated, your business would be subject to heavy fines, and possibly other sanctions as well.

How do you determine the customs bond amount?

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, plus taxes, fees and duties. In the case of a continuous bond, the bond amount has to be 10 percent of the total taxes, fees and 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 do I obtain a customs bond?

The first step in acquiring your U.S. 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 completing CBP Form 301 and applying for your U.S. 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 records, and return the signed copy to the surety company that 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 and duties.

Where can I purchase my bond?

NFP is the largest and most experienced bond agency in the US and is authorized to operate in all 50 states. The volume of bonds we issue every year allows us to offer the most affordable prices on your bond. When you need to purchase a US customs bond or any other type of surety bond, make sure to contact us. 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 reach out to us today.