Every importer, customs broker, surety, and other party involved in the importation of merchandise into the United States is required by federal law to maintain specific records and make them available to CBP upon demand. When those records are not maintained, cannot be produced, or are produced in incomplete or altered form, CBP may impose substantial monetary penalties under 19 U.S.C. § 1509 — up to $10,000 per entry for unintentional failures and up to $100,000 per entry for willful violations. A recordkeeping failure discovered during a CBP audit can trigger not just recordkeeping penalties but also reliquidation of entries at higher duty rates and referral for a § 1592 penalty investigation.
Great Lakes Customs Law represents importers and other parties in CBP recordkeeping penalty proceedings, audit responses, and compliance program development. If you have received a CF-28 Request for Information, a CF-29 Notice of Action, or a formal notice of a recordkeeping penalty, contact us before responding.
The Statutory Framework: § 1508 and § 1509
Two statutes govern CBP’s recordkeeping authority. 19 U.S.C. § 1508 establishes the general obligation to make, keep, and render for examination records relating to importation, drawback claims, and the transportation and storage of bonded merchandise. 19 U.S.C. § 1509 sets out the procedures for CBP’s examination of those records — including the right to conduct audits, issue demands for production, take testimony under oath, and impose monetary penalties for failures to comply.
The implementing regulations at 19 C.F.R. Part 163 provide detailed guidance on which records must be maintained, by whom, for how long, and in what format. An appendix to Part 163 — commonly called the “(a)(1)(A) list” — identifies the specific records required by law or regulation for the entry of merchandise that must be maintained and produced upon CBP demand. Failure to produce a record on the (a)(1)(A) list upon reasonable demand is the most direct trigger for recordkeeping penalty exposure.
Who Must Keep Records
The recordkeeping obligation under § 1509 applies broadly to parties involved in customs transactions. Required recordkeepers include importers of record, customs brokers acting on behalf of importers, sureties on import bonds, parties filing drawback claims, and persons who transport or store merchandise carried or held under bond. A person who “knowingly causes” the importation of merchandise — for example, a domestic buyer who controls the terms and conditions of an importation — may also be a required recordkeeper, even if they are not the importer of record on the entry documents.
What Records Must Be Kept — The (a)(1)(A) List
The (a)(1)(A) list at the Appendix to 19 C.F.R. Part 163 identifies records required by law or regulation for entry of merchandise that must be maintained and produced upon demand. These include entry summaries, commercial invoices, packing lists, bills of lading or airway bills, certificates of origin, country of origin marking documentation, purchase orders, contracts, payment records, and other transaction documents specific to the type of merchandise and the applicable entry requirements. The list is not exhaustive — other records may be required by specific regulations applicable to particular industries, commodities, or trade programs.
An important rule: if a record has been filed with and retained by CBP, it is generally not subject to recordkeeping penalties — but the underlying backup documentation from which it was prepared remains subject to the requirement. An importer cannot satisfy its recordkeeping obligations simply by pointing to what was filed with CBP at the time of entry.
How Long Records Must Be Kept
As a general rule, records relating to an entry must be maintained for five years from the date of entry. This five-year retention period aligns with the statute of limitations for § 1592 penalty actions at the negligence and gross negligence levels, meaning that a CBP audit reaching back five years will expect full records to be available for every entry in that window. Records not related to a specific entry — such as general correspondence, financial records, and contract files relating to customs transactions — must be kept for five years from the date of the activity they document.
CBP Audits Under § 1509
CBP’s Regulatory Audit division is authorized to conduct formal audits of any party subject to the recordkeeping requirements. An audit under § 1509 is an evaluation of records for the purpose of ascertaining the correctness of entries, determining duty liability, determining penalty liability, or ensuring compliance with CBP-administered laws. Audits can range from narrow single-entry reviews to comprehensive multi-year examinations of an importer’s entire customs operations.
Key features of the § 1509 audit process include:
- Advance notice. CBP must provide notice, telephonically and in writing, of its intention to conduct an audit and a reasonable estimate of the time required. The audited party has the right to an entrance conference at which CBP explains the audit’s objectives, records requirements, any sampling plan, and the estimated completion date.
- Statistical sampling. CBP is authorized to use statistical sampling methods in audits rather than conducting an entry-by-entry review. Projected findings based on a sample can be extrapolated across the full universe of entries in the audit period, which can dramatically magnify the apparent duty underpayment or overpayment that forms the basis for any resulting penalty or demand.
- Offsetting of overpayments. In calculating loss of revenue resulting from a recordkeeping or § 1592 violation, CBP may offset overpayments made by the same party on other entries during the audit period. Proactively identifying and documenting overpayments before or during an audit can significantly reduce the net duty underpayment that CBP uses as the basis for penalty calculations.
- Prior disclosure interaction. If an importer submits a prior disclosure during an ongoing audit, offsetting may apply to the prior disclosure calculation, provided CBP approves the importer’s self-review methodology. This creates a strategic opportunity to reduce exposure when violations are discovered internally during an audit.
- Closing conference. CBP must schedule a closing conference to present audit findings and give the audited party an opportunity to respond before a final report is issued.
Recordkeeping Penalty Amounts
Section 1509 establishes a tiered penalty structure based on the type of record demanded and the nature of the failure:
- Failure to produce (a)(1)(A) list records — unintentional: Up to $10,000 per entry for which the demanded record was not produced. This penalty applies where the failure was not willful.
- Failure to produce (a)(1)(A) list records — willful: Up to $100,000 per entry, or if the record relates to fraud, an amount equal to the domestic value of the merchandise. Willful failures are treated with the severity of a fraud-level violation and may be referred for criminal investigation.
- Failure to produce other demanded records: Up to $10,000 per demand for records not on the (a)(1)(A) list but otherwise required by regulation or demanded by CBP under its examination authority.
In assessing penalties, CBP is required by statute to take into account the degree of compliance compared to the total number of importations, the nature of the demanded records, and the recordkeeper’s cooperation. This proportionality requirement provides a basis for mitigation arguments — a recordkeeper with strong overall compliance who is missing records for a small subset of entries is in a materially different position than one with systemic recordkeeping failures across all entries.
Reliquidation Risk
A recordkeeping failure carries consequences beyond the monetary penalty itself. Under § 1509(g), failure to produce listed records or information upon reasonable demand may result in liquidation or reliquidation of the relevant entries at a higher duty rate than the rate at which they were originally entered. If CBP cannot verify the declared value, classification, or country of origin of merchandise because the supporting records are not available, it may assess duties at the highest applicable rate — potentially including antidumping or countervailing duties — without the benefit of any documentation that would have supported a lower rate. Reliquidation claims can be protested, but the burden of proof without underlying records is extremely difficult to meet.
The Recordkeeping Compliance Program
CBP operates a voluntary Recordkeeping Compliance Program under § 1509(f) that provides certified participants with a degree of protection from monetary penalties for non-willful, non-repeated failures to produce demanded records. A certified participant who fails to produce a demanded record for a specific entry — in the absence of willfulness or repeated violations — receives a written notice of violation rather than a monetary penalty. Repeated violations can result in removal from the program and exposure to standard penalty assessment.
To obtain and maintain certification, an importer must demonstrate a genuine understanding of recordkeeping requirements, documented internal procedures for maintaining and producing records, a designated compliance officer, CBP-approved record maintenance procedures, and a functioning internal audit program. Certification provides meaningful protection for importers who invest in compliance infrastructure, and the process of building a certification-eligible program also reduces the risk of the underlying recordkeeping failures that generate § 1509 exposure.
The CF-28 and CF-29: Early Warning Signals
CBP’s most common first-step enforcement tools are the CF-28 (Request for Information) and the CF-29 (Notice of Action). A CF-28 is a written request from a CBP import specialist for documentation supporting a specific entry — invoices, contracts, country of origin evidence, classification support, or other records. A CF-29 advises the importer that CBP intends to take action on an entry, such as reclassifying merchandise or advancing the appraised value, and gives the importer an opportunity to respond before the action is finalized.
Neither a CF-28 nor a CF-29 is itself a penalty notice — but both are serious signals that CBP has concerns about an entry, and the failure to respond adequately, or the discovery during the response process that required records cannot be produced, can escalate quickly into a formal audit, a § 1509 penalty proceeding, or a § 1592 penalty investigation. The response to a CF-28 in particular shapes CBP’s perception of the importer’s compliance posture and can either resolve the issue or trigger broader scrutiny. Legal counsel should be involved in CF-28 and CF-29 responses whenever classification, valuation, country of origin, or AD/CVD applicability is at issue.
How Great Lakes Customs Law Can Help
Great Lakes Customs Law represents importers and other parties in all phases of § 1509 recordkeeping matters — from responding to CF-28 information requests and CF-29 notices of action, through CBP audit representation, to defense against formal recordkeeping penalty notices and reliquidation demands. We also advise importers on recordkeeping compliance program development and Recordkeeping Compliance Program certification.
A CBP audit is not a routine administrative event. The combination of statistical sampling, extrapolation of findings across multiple years of entries, potential reliquidation, and parallel § 1592 penalty exposure means that an importer entering an audit without experienced customs legal counsel is at a significant disadvantage. We engage with CBP’s Regulatory Audit division from the entrance conference through the closing conference, and we work to limit the scope, challenge the methodology, and present mitigating evidence at every stage.
Contact us at our Michigan office at (734) 855-4999 or our Chicago office at (773) 920-1840 for a consultation. For related topics, see our pages on 19 USC 1592 Penalties, Prior Disclosures, Protests Against Customs Decisions, and Import Compliance.