Last year, U.S. Customs and Border Protection (CBP) caused quite a stir when it proposed amendments to Form 5106, the basic form typically filed by a Customhouse broker to provide basic information concerning an importer of record – name and address, type of entity and taxpayer ID/importer number. Stung by a number of identity thefts perpetrated with the use of CBP’s Automated Commercial System (ACS), CBP proposed a huge expansion of the information gathered on the CF 5106, requesting the names and titles of individuals within the company with knowledge of the company’s import operations and financial dealings – as well as these persons’ Social Security numbers or passport information.
Members of the trade community filed more than a score of comments with CBP, making it perfectly clear that under no circumstances did they want their individual identification information loaded into CBP’s notoriously insecure ACS system.
Now, CBP is back with another alteration of CF 5106, and is seeking public comments through August 27, 2015. But the proposed form still raises significant questions and problems.
Under the proposal, Customs Form 5106, would be renamed the Create/Update Importer Identity Form, and would still require greatly expanded information concerning importers, particularly corporate ones. The form still has a place for individuals Social Security Numbers or passport data, but Customs now says that providing this information is optional. But the importer would still need to provide the names of officers or employees having “importing and financial business knowledge of the company”.
The form 5106 would be required to be signed with a certification of accuracy, and an acknowledgment that submission of false information can subject the company to a felony under 28 U.S.C. §1001 for providing false statements to a government officials.
The requirement that an importer identify “officers” having “importing and financial business knowledge” of corporate operations is both vague and overbroad, because of the coupling of “importing” and “financial business” knowledge. In a large corporation, it is possible that an officer of the company may have a tangential knowledge of importing operations, but not an in-depth knowledge. At the same time, the officer may have extensive knowledge of the financial and business structure of the company. Linking “importing and financial business knowledge” together in this way is problematic.
Secondly, the document is required to be signed with a certification of truth, and that if the information is not accurate, the company could be liable for a felony under 28 U.S.C. §1001 (providing false statements to a government officer). There is clearly the concern that, if names of company officials are provided in the CF 5106 under the terms currently provided, they would become immediate “targets” in any Customs investigation of import violations, and could be used by Customs as leverage against the company.
Suppose, for example, an official says that he or she has knowledge of the “importing and financial business” of a company. Assume, further that one afternoon, a Customs official stopped by to quiz this person on a particular Customs issue the importer is being investigated for. If the official says (honestly) “I have no idea what you’re talking about”, would Customs take this as evidence that the importer made a false statement when it signed the CF 5106 and claimed the person had knowledge? The proposed terms of the certification language are simply too broad for comfort.
It also seems likely that any individuals identified in the proposed form would be subject to interviews, depositions and potentially to liability in the event Customs investigates or even audits the importer.
Of course, in a dynamic company, as people change positions, the importer would be compelled to update the CF 5106 form more frequently than it does today.
Other questions on the proposed CF 5106 also appear to be unnecessary. This includes, for example, the requirement to provide “principal banking information”(Box 3G). Since Customs does not have a statutory lien on the company’s assets, there is no need for divulging the location of financial assets. Similar, information concerning articles of incorporation (Boxes 3H and 3I) are readily searchable public records.
The requirement for an entry self--filer to furnish its filer code (Box 3D) could be confusing if a company will both self-file and file under various broker codes. The requirement that the filer provide information regarding “related businesses” (Box 3F) would be incredibly unwieldy for many large, publicly-traded companies, which may have hundreds of related entities, many of which may themselves file CF 5106, and would have to repeat the same information.
Customs is accepting public comments through August 26, 2015. We would be happy to prepare comments on behalf of interested parties.