U.S. Customs and Border Protection (CBP) announced that paper applications for the reconciliation program will no longer be required, and its “blanket flagging” of entries for reconciliation will end as of October 1, 2016 when the ACS Reconciliation Prototype moves to CBP’s Automated Commercial Environment (ACE).
With the end of “blanket flagging” by CBP, all entries will need to be flagged by filers/brokers. Importers that elected blanket flagging on their reconciliation application need to consider contacting their customs brokers to define new flagging requirements.
Reconciliation is a mechanism by which importers may identify entries for which certain information is not available at the time of the entry filing, and may submit this information at a later date. Subject entries are identified via an “electronic” entry flagging.
As part of the reconciliation approval process, importers have been able to request "blanket flagging" reconciliation approvals for specific issues. If an importer is approved for "blanket flagging" reconciliation, CBP’s current system automatically sets up those summaries as being subject to reconciliation for the issue(s) approved in the blanket.
However, with the October 1, 2016 effective date for mandatory use of the ACE for reconciliation, all importers with bond riders filed with CBP will be automatically set up for reconciliation and will be able to flag entries for reconciliation without the need of paper applications and CBP prior approval for the program.
As part of this change, the “blanket” feature in ACS will no longer be available, and underlying entries will need to be flagged by filers/brokers at the time of filing the entry summary. Also, reconciliation flags may be monitored through various reports provided in ACE including AM-008 Entry Summary Line Detail Report. A reconciliation flagging indicator is included under the column “Other Recon Ind” and indicator codes vary depending on type of reconciliation flagging and whether the underlying entry is pending reconciliation or a reconciliation has been submitted. For instance, 001 indicates open underlying entries flagged for value, while 021 indicates reconciled value underlying entries (the table below provides additional issue codes).
The transition to ACE will ease the reconciliation process by ending the paper application requirement and subsequent CBP approval, and by allowing any importers with the required bond on file, to utilize the reconciliation program.
However, importers currently benefitting from blanket flagging need to consider contacting their customs brokers or updating their internal processes (for self-filers) to define new flagging guidelines. Filers cannot modify reconciliation flagging following entry summary filings. If reconciliation flags are not included at the time of entry filing, filers will need to make a formal request with CBP to retroactively flag the entries in question. Such requests will be granted on a case-by-case basis, and are to be used on an ad hoc basis only. When flagging is not made at the time of entry-summary submission, importers may need to rely on alternative mechanisms—such as 520(d) claims, post-entry amendments, and prior disclosures—to correct information previously submitted via reconciliation.
CBP is hosting a webinar on the changes concerning the reconciliation program on Friday, August 19, 2016, at 12:30 p.m. EST.
For more information, contact a professional with KPMG’s Trade & Customs practice:
Douglas Zuvich | +1 (312) 665-1022 | email@example.com
Andrew Siciliano | +1 (631) 425-6057 | firstname.lastname@example.org
Todd Smith | +1 (949) 885-5617 | email@example.com
Luis Abad | +1 (212) 954-3094 | firstname.lastname@example.org
John McLoughlin | +1 (267) 256-2614 | email@example.com
George Zaharatos | +1 (404) 222-3292 | firstname.lastname@example.org
© 2018 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.