H. R. 3450—119
shall make, keep, and render for examination and inspection records
(which for purposes of this section include, but are not limited
to, statements, declarations, documents and electronically generated
or machine readable data) which—
‘‘(A) pertain to any such activity, or to the information
contained in the records required by this Act in connection
with any such activity; and
‘‘(B) are normally kept in the ordinary course of business.’’;
and
(2) by amending subsection (c) to read as follows:
‘‘(c) PERIOD OF TIME.—The records required by subsections (a)
and (b) shall be kept for such period of time, not to exceed 5
years from the date of entry or exportation, as appropriate, as
the Secretary shall prescribe; except that records for any drawback
claim shall be kept until the 3rd anniversary of the date of payment
of the claim.’’.
SEC. 615. EXAMINATION OF BOOKS AND WITNESSES.
Section 509 (19 U.S.C. 1509) is amended as follows:
(1) Subsection (a) is amended—
(A) by striking out ‘‘and taxes’’ wherever it appears
and inserting ‘‘, fees and taxes’’;
(B) by amending paragraph (1) to read as follows:
‘‘(1) examine, or cause to be examined, upon reasonable
notice, any record (which for purposes of this section, includes,
but is not limited to, any statement, declaration, document,
or electronically generated or machine readable data) described
in the notice with reasonable specificity, which may be relevant
to such investigation or inquiry, except that—
‘‘(A) if such record is required by law or regulation
for the entry of the merchandise (whether or not the Cus-
toms Service required its presentation at the time of entry)
it shall be provided to the Customs Service within a reason-
able time after demand for its production is made, taking
into consideration the number, type, and age of the item
demanded; and
‘‘(B) if a person of whom demand is made under
subparagraph (A) fails to comply with the demand, the
person may be subject to penalty under subsection (g);’’;
(C) by amending that part of paragraph (2) that pre-
cedes subparagraph (D) to read as follows:
‘‘(2) summon, upon reasonable notice—
‘‘(A) the person who—
‘‘(i) imported, or knowingly caused to be imported,
merchandise into the customs territory of the United
States,
‘‘(ii) exported merchandise, or knowingly caused
merchandise to be exported, to Canada,
‘‘(iii) transported or stored merchandise that was
or is carried or held under customs bond, or knowingly
caused such transportation or storage, or
‘‘(iv) filed a declaration, entry, or drawback claim
with the Customs Service;
‘‘(B) any officer, employee, or agent of any person
described in subparagraph (A);
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H. R. 3450—120
‘‘(C) any person having possession, custody or care
of records relating to the importation or other activity
described in subparagraph (A); or’’; and
(D) by striking out the comma at the end of subpara-
graph (D) and inserting a semicolon.
(2) Subsections (b) and (c) are redesignated as subsections
(c) and (d), respectively.
(3) The following new subsection is inserted after subsection
(a):
‘‘(b) REGULATORY AUDIT PROCEDURES.—
‘‘(1) In conducting a regulatory audit under this section
(which does not include a quantity verification for a customs
bonded warehouse or general purpose foreign trade zone), the
Customs Service auditor shall provide the person being audited,
in advance of the audit, with a reasonable estimate of the
time to be required for the audit. If in the course of an audit
it becomes apparent that additional time will be required, the
Customs Service auditor shall immediately provide a further
estimate of such additional time.
‘‘(2) Before commencing an audit, the Customs Service audi-
tor shall inform the party to be audited of his right to an
entry conference at which time the purpose will be explained
and an estimated termination date set. Upon completion of
on-site audit activities, the Customs Service auditor shall sched-
ule a closing conference to explain the preliminary results
of the audit.
‘‘(3) Except as provided in paragraph (5), if the estimated
or actual termination date for an audit passes without the
Customs Service auditor providing a closing conference to
explain the results of the audit, the person being audited may
petition in writing for such a conference to the appropriate
regional commissioner, who, upon receipt of such a request,
shall provide for such a conference to be held within 15 days
after the date of receipt.
‘‘(4) Except as provided in paragraph (5), the Customs
Service auditor shall complete the formal written audit report
within 90 days following the closing conference unless the
appropriate regional commissioner provides written notice to
the person being audited of the reason for any delay and
the anticipated completion date. After application of any exemp-
tion contained in section 552 of title 5, United States Code,
a copy of the formal written audit report shall be sent to
the person audited no later than 30 days following completion
of the report.
‘‘(5) Paragraphs (3) and (4) shall not apply after the Cus-
toms Service commences a formal investigation with respect
to the issue involved.’’.
(4) Subsection (d) (as redesignated by paragraph (2)) is
amended—
(A) by striking out ‘‘statements, declarations, or docu-
ments’’ in paragraph (1)(A) and inserting ‘‘those’’;
(B) by inserting ‘‘, unless such customhouse broker
is the importer of record on an entry’’ after ‘‘broker’’ in
paragraph (1)(C)(i);
(C) by striking out ‘‘import’’ in each of paragraphs
(2)(B) and (4)(B);
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H. R. 3450—121
(D) by inserting ‘‘described in section 508’’ after ‘‘trans-
actions’’ in each of paragraphs (2)(B) and (4)(B); and
(E) by inserting ‘‘, fees,’’ after ‘‘duties’’ in paragraph
(4)(A).
(5) The following new subsections are added at the end
thereof:
‘‘(e) LIST OF RECORDS AND INFORMATION.—The Customs Service
shall identify and publish a list of the records or entry information
that is required to be maintained and produced under subsection
(a)(1)(A).
‘‘(f) RECORDKEEPING COMPLIANCE PROGRAM.—
‘‘(1) IN GENERAL.—After consultation with the importing
community, the Customs Service shall by regulation establish
a recordkeeping compliance program which the parties listed
in section 508(a) may participate in after being certified by
the Customs Service under paragraph (2). Participation in the
recordkeeping compliance program by recordkeepers is vol-
untary.
‘‘(2) CERTIFICATION.—A recordkeeper may be certified as
a participant in the recordkeeping compliance program after
meeting the general recordkeeping requirements established
under the program or after negotiating an alternative program
suited to the needs of the recordkeeper and the Customs Serv-
ice. Certification requirements shall take into account the size
and nature of the importing business and the volume of imports.
In order to be certified, the recordkeeper must be able to
demonstrate that it—
‘‘(A) understands the legal requirements for record-
keeping, including the nature of the records required to
be maintained and produced and the time periods involved;
‘‘(B) has in place procedures to explain the record-
keeping requirements to those employees who are involved
in the preparation, maintenance, and production of
required records;
‘‘(C) has in place procedures regarding the preparation
and maintenance of required records, and the production
of such records to the Customs Service;
‘‘(D) has designated a dependable individual or individ-
uals to be responsible for recordkeeping compliance under
the program and whose duties include maintaining famili-
arity with the recordkeeping requirements of the Customs
Service;
‘‘(E) has a record maintenance procedure approved by
the Customs Service for original records, or, if approved
by the Customs Service, for alternative records or record-
keeping formats other than the original records; and
‘‘(F) has procedures for notifying the Customs Service
of occurrences of variances to, and violations of, the require-
ments of the recordkeeping compliance program or the
negotiated alternative programs, and for taking corrective
action when notified by the Customs Service of violations
or problems regarding such program.
‘‘(g) PENALTIES.—
‘‘(1) DEFINITION.—For purposes of this subsection, the term
‘information’ means any record, statement, declaration, docu-
ment, or electronically stored or transmitted information or
data referred to in subsection (a)(1)(A).
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H. R. 3450—122
‘‘(2) EFFECTS OF FAILURE TO COMPLY WITH DEMAND.—Except
as provided in paragraph (4), if a person fails to comply with
a lawful demand for information under subsection (a)(1)(A)
the following provisions apply:
‘‘(A) If the failure to comply is a result of the willful
failure of the person to maintain, store, or retrieve the
demanded information, such person shall be subject to
a penalty, for each release of merchandise, not to exceed
$100,000, or an amount equal to 75 percent of the appraised
value of the merchandise, whichever amount is less.
‘‘(B) If the failure to comply is a result of the negligence
of the person in maintaining, storing, or retrieving the
demanded information, such person shall be subject to
a penalty, for each release of merchandise, not to exceed
$10,000, or an amount equal to 40 percent of the appraised
value of the merchandise, whichever amount is less.
‘‘(C) In addition to any penalty imposed under subpara-
graph (A) or (B) regarding demanded information, if such
information related to the eligibility of merchandise for
a column 1 special rate of duty under title I, the entry
of such merchandise—
‘‘(i) if unliquidated, shall be liquidated at the
applicable column 1 general rate of duty; or
‘‘(ii) if liquidated within the 2-year period preced-
ing the date of the demand, shall be reliquidated,
notwithstanding the time limitation in section 514 or
520, at the applicable column 1 general rate of duty;
except that any liquidation or reliquidation under clause
(i) or (ii) shall be at the applicable column 2 rate of duty
if the Customs Service demonstrates that the merchandise
should be dutiable at such rate.
‘‘(3) AVOIDANCE OF PENALTY.—No penalty may be assessed
under this subsection if the person can show—
‘‘(A) that the loss of the demanded information was
the result of an act of God or other natural casualty or
disaster beyond the fault of such person or an agent of
the person;
‘‘(B) on the basis of other evidence satisfactory to the
Customs Service, that the demand was substantially com-
plied with; or
‘‘(C) the information demanded was presented to and
retained by the Customs Service at the time of entry or
submitted in response to an earlier demand.
‘‘(4) PENALTIES
NOT
EXCLUSIVE.—Any penalty imposed
under this subsection shall be in addition to any other penalty
provided by law except for—
‘‘(A) a penalty imposed under section 592 for a material
omission of the demanded information, or
‘‘(B) disciplinary action taken under section 641.
‘‘(5) REMISSION OR MITIGATION.—A penalty imposed under
this section may be remitted or mitigated under section 618.
‘‘(6) CUSTOMS SUMMONS.—Nothing in this subsection shall
limit or preclude the Customs Service from issuing, or seeking
the enforcement of, a customs summons.
‘‘(7) ALTERNATIVES TO PENALTIES.—
‘‘(A) IN GENERAL.—When a recordkeeper who—
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