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After speaking with a couple of the affected clients, we found no consensus.
Recently a client who had been filing drawback claims with the Boston office was asked how they were affected by the move to the Newark, New Jersey drawback office. Believe it or not, they are quite pleased. They stated, "Since moving our accounts from the Boston Drawback Center to Newark, New Jersey's center we have been extremely pleased with the high level of service. Our questions are answered promptly and the staff is very knowledgeable. Also, if the person assigned to you is not available, the staff has a specialist who is designated "Drawback Specialist of the Month". This enables us to receive prompt answers on general questions without delay. Lastly, the processing of refunds is prompt and our customers have commented positively about the receipt of their drawback refunds in a more expeditious manner." This is great news! A relatively painless transfer from Boston to Newark, great service, it's almost too good to believe, but this filer swears they are getting treated like royalty. We spoke to another filer who had been filing drawback through the New Orleans office prior to that offices closing hasn't has such luck. They were a licensed broker filing drawback claims via diskette, prior to February 2003, on a district permit with the New Orleans office. The problems started with the complete shut down of their office because they did not have a district permit for another drawback office and ABI drawback privileges. The drawback chief in NOLA (New Orleans, Louisiana) spoke to headquarters requesting an exception to file with their current New Orleans district permit with the Houston office. In a nutshell, the answer was NO!! It took the client about three months to get back up and running via a national permit and ABI. They eventually chose the San Francisco office after much discussion with their peers and various Customs personnel. Here is what they have to say. "The first shock was the additional paperwork required. I thought electronic filing was supposed to make it easier for the trade as well as Customs. Previously, all I had to do was staple together the 7551, coding sheet, import summary by entry and chronological summary by part and send in a diskette. Now I must additionally submit an import summary by item number and chronological summary by date. And, I must staple the coding sheet to the front of a straight cut manila folder and write the claimant, claim number and type claim on the tab. And here I thought electronic filing would reduce paperwork". "Immediately after filing claims in S.F. I received my first "desk review." Here I've been filing claims in NOLA for the past 8 years and knew what they want. Now I find that the S.F. office has different requirements. I now find that secondary evidence of exportation is a big issue. It's like the only proof of export acceptable is the bill of lading for regular exports. And for shipments to Canada, a B-3 is no longer sufficient. I'm now told that additional paperwork is required also. Where does the paperwork stop?? These additional requirements don't hurt the large corporations and the cheaters. It does however hurt the smaller companies that export their goods in smaller shipments via many different avenues". "After 9 months of filing claims in S.F. I'm receiving no desk reviews. Mind you, I like not getting desk reviews but I believe the case to be that the drawback specialists are so overburdened with work; they are no longer being pro-active by letting claims marked for desk review wait until liquidation. This is aggravating to me because it is much more convenient to pull documents 3 months old than those that are 2 years old". "I find that these office closures were poorly planned and have been unproductive for both the trade and the drawback specialists at Customs. I believe that the delays are going to worsen. Customs has lost (I estimate) 40% of their knowledgeable drawback specialists from the closures and I haven't heard anything about new hires". "I continue to file claims in S.F. and despite the problems mentioned am relieved to know that I can, in fact, pick up the phone and speak to a specialist. However, I am concerned about whether I will be able to continue making a living?" As you can see these are two drastically different scenarios but for the most part those that have moved their drawback to San Francisco and New York have had good experiences so far. |
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| overnight carrier and there is no question of date of receipt or the timeliness of the paper claim being sent in. Tom also finds that the accelerated payments are quicker, because there are no manual reviews. Spot checks will happen, although Tom has not experienced one yet. Customs stated that they will be selecting various claims to review and when this happens, they will need the claimant to send in the paper claim first in order for Customs to select what they want to review and then go on to the supporting documents. All in all, Tom says "it works well and is both cost and time effective". | |||||||||||||
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Same Condition/Unused Drawback to Mexico or Canada can be done Canada and Mexico have to be done on a direct ID basis. Substitution to Canada went away with NAFTA. But there are different methodologies behind direct ID. Most of us have heard of the accounting terms FIFO and LIFO, but may not understand exactly how they work in a drawback situation or when they should be used. When utilizing First-In, First-Out (FIFO) all receipts (imports and domestic receipts) and all sales (exports and domestic sales) are accounted for. Next, the first sale (export sale or domestic sale) and the oldest legal receipt (within three years of the sale), are married for the drawback claim reports. Finally we draw down the inventory of the receipts and the sales by like amounts. Last-In, First-Out (LIFO), works almost the same except the sales are married to the newest receipts first. After all sales in your claim are processed there should be a receipt to match each. If any export or domestic sales are not matched to an import or domestic receipt, the inventory is out of balance and the discrepancy must be located. The work in finding a 'home' for all of the sales makes the accounting methods FIFO and LIFO less attractive. Before choosing one of the accounting methods, consider how your own general inventory moves and use the same methodology. It seems most companies move merchandise on a FIFO basis as most drawback accounting is based on the FIFO method. The explicit ID tracks an export back to an import by a unique reference number such as serial number, order number or maybe even the 7501 number. Usually only very costly items will carry a serial number. Other commodities such as food and drugs can carry lot numbers that could be used to track an export back to an import on an explicit ID basis. In some cases even an order number is carried throughout, from import purchase to export sale and that could be used as the unique, traceable reference for direct ID. Customs allows use of the old "blanket ID" method. The blanket ID method (LOHI, for Low to High) specifies a match of exports to imports based on the imports with the lowest duty per unit first. If two or more imports have the same (lowest) duty per unit then you claim drawback on the oldest of the lowest. To use the blanket ID, all receipts must be imports. The same part number(s) CANNOT be bought or made in the US. If you make parts1 thru 10 in China (and not at all in the US) and 11-15 in China and the US you can still claim LOHI on parts 1-10 because all receipts are imports. You cannot claim blanket ID (LOHI) at all on parts 11-15 because they are not always of foreign origin. Many people fit the blanket ID category as it seems everything is now made overseas. Word has gotten out that blanket ID is allowed. More folks are claiming exports to Canada and Mexico now as they familiarize themselves with the correct methods. |
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| Compliance they expect claimants to do a better job of preparing drawback claims and seem to be willing to do a spot check of some documents on the claim and if all is well, they move the claim along. Customs may be trying to weed out the marginal filers by keeping them on their toes. The theory being that you keep filers alert to the fact that they must really document what they're doing with the money Customs gives them. This being so, the filers with sloppy recordkeeping procedures may just go away and the Customs workload falls. Customs themselves is overseen and/or audited by other agencies. They must show themselves as adequately policing the drawback community and this is simply how they do that. No one is singled out for a document request over anyone else, unless perhaps that company or others in that industry have had repeated problems. | |||||||||||||
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Question & Answer Question Answer |
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AAEI annual meeting Wesccon Annual Get-Together |
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