What Is “Reasonable Care” in U.S. Import Compliance?

Under U.S. customs law, importers must exercise reasonable care when entering merchandise into the United States. In practical terms, this means taking appropriate steps to ensure that information provided to U.S. Customs and Border Protection (CBP) is accurate, complete, and supported by appropriate records.

Reasonable care may involve issues such as:

• Tariff classification under the HTSUS

• Customs valuation

• Country of origin and marking

• Recordkeeping

• Free trade agreement eligibility and claims

• Admissibility requirements administered by CBP and other agencies, such as FDA or EPA

• Required licenses, permits, certifications, and supporting documentation

Legal Basis

The reasonable-care standard is reflected in 19 U.S.C. § 1484(a) and was introduced as part of the Customs Modernization Act of 1993 (Mod Act).

The Mod Act significantly increased the importer's responsibility for the accuracy of entry information under the concept of informed compliance and shared responsibility. Although customs brokers frequently prepare and transmit entries, the importer of record remains responsible for using reasonable care in providing the information necessary for CBP to properly assess duties and determine whether the merchandise may be imported.

Examples of Exercising Reasonable Care

Depending on the circumstances, reasonable-care practices may include:

• Consulting qualified customs professionals or trade counsel when necessary

• Reviewing CBP's Informed Compliance Publications and other agency guidance

• Obtaining CBP binding rulings on classification, origin, or other customs issues when appropriate

• Establishing written import compliance procedures

• Periodically reviewing classifications, valuation methodologies, origin determinations, and broker instructions

• Training personnel involved in purchasing, logistics, customs, accounting, and trade compliance

• Maintaining records in accordance with applicable customs recordkeeping requirements, including 19 C.F.R. Part 163

• Documenting the basis for significant customs determinations

CBP's Reasonable Care Checklist also provides useful guidance for importers evaluating their compliance procedures.

What Can Happen If an Importer Does Not Exercise Reasonable Care?

Failure to exercise reasonable care can create significant customs exposure. Depending on the circumstances, consequences may include:

• Monetary penalties under 19 U.S.C. § 1592 for negligent, grossly negligent, or fraudulent violations

• Additional duty assessments

• Increased CBP inquiries, examinations, or compliance reviews

• Delays in cargo release

• Seizure, exclusion, or other enforcement action where applicable

• Difficulties maintaining eligibility for certain trusted-trader or compliance programs

In practical terms, reasonable care means that an importer should take an active role in its customs compliance program. Reliance on a customs broker alone does not necessarily satisfy the importer's statutory responsibilities. Importers should understand how key customs determinations are being made, maintain appropriate documentation, and seek assistance when an issue requires specialized expertise.

When Should an Importer Consult a Trade Attorney or Licensed Customs Broker?

U.S. import compliance involves both operational and legal considerations. Customs brokers and trade attorneys often work together, but they serve different functions.

Licensed Customs Broker

A licensed customs broker is particularly valuable for the operational aspects of importing, including:

• Preparing and transmitting customs entries

• Communicating routine entry information to CBP

• Assisting with classification and valuation matters in connection with entry processing

• Managing entry documentation and customs procedures

• Advising on day-to-day import operations

Customs brokers are licensed by CBP and play a critical role in the U.S. import process.

Trade Attorney

A trade attorney may be particularly appropriate when a matter involves significant legal interpretation, potential liability, enforcement exposure, or strategic decisions, including:

• Complex classification, valuation, or country-of-origin questions

• CBP investigations, audits, penalties, seizures, or requests for information

• Prior disclosures

• Binding ruling strategy

• Customs protests and litigation

• Export controls and economic sanctions

• Internal compliance investigations

• Structuring compliance programs to address identified legal risks

One important distinction is that communications with an attorney made for the purpose of obtaining or providing legal advice may be protected by the attorney-client privilege, while communications with a customs broker or consultant generally do not receive that same protection.

Why Does Attorney-Client Privilege Matter in Trade Compliance?

Trade compliance reviews can uncover difficult issues: historical classification errors, undervaluation, incorrect origin declarations, unsupported free trade agreement claims, export-control concerns, or potential sanctions violations.

When a company is evaluating these issues, it often needs to understand what happened, what the legal exposure may be, and what corrective action should be taken.

Attorney-client privilege can provide important protection for certain confidential communications made between the company and its attorneys for the purpose of seeking or providing legal advice.

Importantly, however, privilege generally protects communications, not the underlying facts themselves. It also does not automatically protect every document generated during a compliance review. The structure and purpose of the review matter.

1. Internal Investigations and Potential Disclosures

When a company discovers a possible customs, export-control, or sanctions violation, trade counsel can help structure and conduct an investigation for the purpose of providing legal advice.

This may allow privileged discussions concerning:

• The nature and scope of the potential violation

• The company's legal exposure

• Whether additional investigation is necessary

• Whether a prior or voluntary disclosure should be considered

• Remediation and compliance improvements

The ability to communicate candidly with legal counsel can be particularly valuable when management must evaluate sensitive facts before deciding how to proceed.

2. CBP Penalties and Enforcement Matters

When CBP issues a penalty notice, conducts an investigation, or raises significant compliance concerns, counsel can evaluate the legal merits and develop a response strategy.

Privileged attorney-client communications may include counsel's assessment of:

• Potential liability

• Evidentiary weaknesses or defenses

• Mitigating circumstances

• Disclosure strategy

• Settlement or petition strategy

The privilege can therefore allow a company and its counsel to evaluate legal risk candidly while developing a response.

3. Compliance Reviews and Program Development

Trade counsel can also assist companies in reviewing existing compliance systems and identifying areas of legal risk.

For example, counsel may evaluate:

• Classification methodologies

• Customs valuation practices

• Related-party transactions

• Country-of-origin determinations

• Free trade agreement eligibility

• Recordkeeping practices

• Broker oversight

• Export-control or sanctions procedures

Where the engagement is structured for the purpose of obtaining legal advice, certain communications relating to that advice may qualify for attorney-client privilege.

4. Strategic Legal Advice

International trade regulations frequently involve questions that go beyond routine entry processing.

Companies may need legal advice regarding how statutes, regulations, administrative rulings, and court decisions apply to particular transactions. Counsel can help interpret those requirements and assess available options while considering the company's broader legal exposure.

Attorney-Client Privilege Does Not Generally Extend to Customs Brokers or Consultants

Customs brokers and trade consultants can provide substantial technical and operational expertise. However, communications directly between a company and a non-attorney customs professional generally do not independently qualify for attorney-client privilege.

Those communications and documents therefore may be subject to disclosure in litigation, government investigations, audits, or other proceedings, depending on the circumstances.

This does not mean companies should avoid working with customs brokers. To the contrary, brokers are essential partners for many importers. Rather, when a company identifies a potentially significant legal or enforcement issue, it should consider whether legal counsel should be involved before undertaking a sensitive internal investigation or developing a response strategy.

In appropriate circumstances, attorneys may also work with customs brokers, consultants, accountants, or other specialists as part of a legal engagement. Whether privilege or other protections apply to those communications depends on the facts, purpose, and structure of the engagement.

The Practical Takeaway

Exercising reasonable care does not require an importer to eliminate every possible error. It does require the importer to have a reasonable, documented process for identifying its customs obligations, making informed decisions, and correcting problems when they are discovered.

For routine import operations, a knowledgeable customs broker may be the appropriate resource. When the issue involves legal uncertainty, significant duty exposure, potential violations, disclosures, penalties, investigations, or litigation, involving trade counsel early can help the company evaluate the issue under appropriate legal protections and develop a defensible compliance strategy.