Agent / Employee Liability for Customs Transgressions |
By Ronald C. Chauvel, Esq.
Those who are employed in the complex world of customs may from time to time encounter situations where issues arise regarding the propriety of certain export or import authority and documentation. In these instances, employers should be made aware of concerns and should turn to experts in the field for the answers.
If the employer (exporter, importer, or otherwise) is not vigilant in seeking expert customs assistance , then the employee dealing with the day-to-day customs issues may ask the following question: Am I personally liable if I have knowledge that my company is or may not be compliant with pertinent customs requirements?
The answer is to be found in Title 19 of the United States Code which is entitled “Customs Duties.” But, as with most complex areas of the law, there may not always be a simple answer to the issue of employee liability.
Section 1592 of Title 19 is entitled “Penalties for fraud, gross negligence and negligence”. It states, in part, that “… no person, by fraud, gross negligence, or negligence – (A) may enter, introduce, or attempt to enter or introduce any merchandise into the commerce of the United States by means of – (i) any document or electronically transmitted data or information, written or oral statement, or act which is material and false, or (ii) any omission which is material, or (B) may aid or abet any other person to violate subparagraph (A).”
On the positive side, section 1592 goes on to state that “Clerical errors or mistakes of fact are not violations … unless they are part of a pattern of negligent conduct.”
Section 1592 prescribes maximum penalties. For instance, for a fraud violation the maximum penalty shall not exceed the domestic value of the merchandise. In instances of gross negligence, the maximum penalty is the lesser of the domestic value of the merchandise or four times the lawful duties, taxes and fees of which the United Stats was deprived.
The Customs & Border Protection (CBP) is required to serve on the person concerned a "Pre-Penalty Notice" which sets forth the facts that CBP has accumulated that indicate a violation has occurred, and the person served is given an opportunity to respond and provide additional information and facts to the CBP. So, what are the chances that an employee of an importer or exporter might be pursued by CBP under the above procedures? Generally, it is unlikely. Normally, CBP pursues the employer that is the official importer / exporter. However, there are never any guarantees in these types of matters. If the employee is an owner, officer or director of the importer / exporter and gained or stood to gain by way of improper customs activity, then there is the real prospect that CBP may pursue the employee.
Likewise, if the employee was aware of the violations and failed to forewarn the employer, the employer might pursue the employee for any penalties the employer is required to pay. This would be particularly true where the employee was somehow deriving gain by way of the illegal customs activity.
Good judgment in this area means immediately forewarning your employer of any customs issues that may arise. If the employer fails or refuses to seek expert advice, then you may wish to look elsewhere for employment.
| About the Author: |
| Mr. Chauvel practices with the firm of Greene, Chauvel, Descalso & Minoletti in San Mateo, California. He practices transportation law and may be reached at 650/573-9500 or at ron@greenechauvel.com. |
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| October 2009 |
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