When an import is made into the U.S., the duties, taxes and fees are due to CBP within 10 days. The Periodic Monthly Statement Processing Program (PMS) allows the principal to pay these duties, taxes and fees on the 15th working day of the following month. This program is only offered for continuous Importer bonds.
This program is becoming more and more popular among importers. This method of duty payment, if so elected by the principal, can provide the principal with a valuable cash-flow tool since it allows the deferral of duty payment up to the 15th working day of the month following the release of the merchandise. Many large companies and experienced importers recognize the benefits and utilize the PMS program; however, many companies rely on third party intermediaries (i.e. customs brokers) to handle all aspects of duty payment. While this can be convenient, especially for a small to mid-sized importer, it can lend itself to some pitfalls. CBP recognized the following issues:
- Customs brokers, acting in a capacity as attorney in fact under a valid Customs power of attorney, may enroll principals in the PMS program with or without the principal’s knowledge. The broker can then flag the principal’s entries for PMS. If the broker places these eligible flagged entries on the broker’s monthly statement rather than an importer’s statement, they would not be required to pay CBP until the 15th day of the next month as provided for under the PMS program. However, the broker may continue to invoice and collect duty, taxes, and fees from the principal within the standard 10 day window of payment for consumption entries. In this scenario, the broker has gained the benefit of the duty deferral rather than the principal.
- Many principals elect to set up an ACH account with CBP to facilitate the payment of duty, taxes, and fees to CBP in a timely manner including non-portal account PMS. The principal may also rely on their customs broker to file the monthly statement with CBP and pay the duties via the broker’s ACH account. However, rather than issuing individual monthly statements for each account, many customs brokers simply group or consolidate all of their accounts onto one PMS. While this is certainly more efficient for the customs broker, it could be detrimental for the principals identified on these consolidated statements due to the way CBP processes PMS. If processed on a consolidated statement, all of the estimated duty, taxes, and fees due for each principal must be paid at the time of filing. If all the estimated duties due under a consolidated statement are not paid to CBP at the time the statement is submitted, regardless of the number of accounts identified, the entire statement is rejected resulting in liquidated damage penalties for all the principals or importers identified on the consolidated statement!
Many sureties see the use of periodic payment as a factor in its underwriting. Our office monitors import activity and if we note that a principal is using PMS, the surety may re-evaluate the terms of the bond and ask for additional underwriting information. We recommend that you ask your client to notify you if they decide to participate in PMS in order to advise the surety as soon as possible to ensure there would be no disruptions to the bond.