[Code of Federal Regulations]
[Title 19, Volume 2]
[Revised as of April 1, 2002]
From the U.S. Government Printing Office via GPO Access
[CITE: 19CFR162.74]

[Page 259-261]
 
                        TITLE 19--CUSTOMS DUTIES
 
  CHAPTER I--UNITED STATES CUSTOMS SERVICE, DEPARTMENT OF THE TREASURY
 
PART 162--INSPECTION, SEARCH, AND SEIZURE--Table of Contents
 
          Subpart G--Special Procedures for Certain Violations
 
Sec. 162.74  Prior disclosure.

    (a) In general--(1) A prior disclosure is made if the person 
concerned discloses the circumstances of a violation (as defined in 
paragraph (b) of this section) of 19 U.S.C. 1592 or 19 U.S.C. 1593a, 
either orally or in writing to a Customs officer before, or without 
knowledge of, the commencement of a formal investigation of that 
violation, and makes a tender of any actual loss of duties, taxes and 
fees or actual loss of revenue in accordance with paragraph (c) of this 
section. A Customs officer who receives such a tender in connection with 
a prior disclosure shall ensure that the tender is deposited with the 
concerned local Customs entry officer.
    (2) A person shall be accorded the full benefits of prior disclosure 
treatment if that person provides information orally or in writing to 
Customs with respect to a violation of 19 U.S.C. 1592 or 19 U.S.C. 1593a 
if the concerned Fines, Penalties, and Forfeitures Officer is satisfied 
the information was provided before, or without knowledge of, the 
commencement of a formal investigation, and the information provided 
includes substantially the information specified in paragraph (b) of 
this section. In the case of an oral disclosure, the disclosing party 
shall confirm the oral disclosure by providing a written record of the 
information conveyed to Customs in the oral disclosure to the concerned 
Fines, Penalties, and Forfeitures Officer within 10 days of the date of 
the oral disclosure. The concerned Fines, Penalties and Forfeiture 
Officer may, upon request of the disclosing party which establishes a 
showing of good cause, waive the oral disclosure written confirmation 
requirement. Failure to provide the written confirmation of the oral 
disclosure or obtain a waiver of the requirement may result in denial of 
the oral prior disclosure.
    (b) Disclosure of the circumstances of a violation. The term 
``discloses the circumstances of a violation'' means the act of 
providing to Customs a statement orally or in writing that:
    (1) Identifies the class or kind of merchandise involved in the 
violation;
    (2) Identifies the importation or drawback claim included in the 
disclosure by entry number, drawback claim number, or by indicating each 
concerned Customs port of entry and the approximate dates of entry or 
dates of drawback claims;
    (3) Specifies the material false statements, omissions or acts 
including an explanation as to how and when they occurred; and
    (4) Sets forth, to the best of the disclosing party's knowledge, the 
true and accurate information or data that should have been provided in 
the entry or drawback claim documents, and states that the disclosing 
party will provide any information or data unknown at the time of 
disclosure within 30 days of the initial disclosure date. Extensions of 
the 30-day period may be requested by the disclosing party from the 
concerned Fines, Penalties, and Forfeitures Officer to enable the party 
to obtain the information or data.
    (c) Tender of actual loss of duties, taxes and fees or actual loss 
of revenue. A person who discloses the circumstances of the violation 
shall tender any actual loss of duties, taxes and fees or actual loss of 
revenue. The disclosing party may choose to make the tender either at 
the time of the claimed prior disclosure, or within 30 days after 
Customs notifies the person in writing of Customs calculation of the 
actual loss of duties, taxes and fees or actual loss of revenue. The 
Fines, Penalties, and Forfeitures Officer may extend the 30-day period 
if there is good cause to do so. The disclosing party may request that 
the basis for determining Customs asserted actual loss of duties, taxes 
or fees be reviewed by Headquarters, provided that the actual loss of 
duties, taxes or fees determined by Customs exceeds $100,000 and is 
deposited with Customs, more than 1 year remains under the statute of 
limitations involving the shipments covered by the claimed disclosure, 
and the disclosing party has complied with all other prior disclosure 
regulatory provisions. A grant of review is within the discretion of 
Customs Headquarters in consultation with the appropriate field office, 
and such Headquarters review shall be limited to determining issues of 
correct tariff classification, correct rate of duty, elements of 
dutiable value, and correct application of any special rules

[[Page 260]]

(GSP, CBI, HTS 9802, etc.). The concerned Fines, Penalties, and 
Forfeitures Officer shall forward appropriate review requests to the 
Chief, Penalties Branch, Customs Headquarters, Office of Regulations and 
Rulings. After Headquarters renders its decision, the concerned Fines, 
Penalties, and Forfeitures Officer will be notified and the concerned 
Customs port will recalculate the loss, if necessary, and notify the 
disclosing party of any actual loss of duties, taxes or fees increases. 
Any increases must be deposited within 30 days, unless the local Customs 
office authorizes a longer period. Any reductions of the Customs 
calculated actual loss of duties, or and fees shall be refunded to the 
disclosing party. Such Headquarters review decisions are final and not 
subject to appeal. Further, disclosing parties requesting and obtaining 
such a review waive their right to contest either administratively or 
judicially the actual loss of duties, taxes and fees or actual loss of 
revenue finally calculated by Customs under this procedure. Failure to 
tender the actual loss of duties, taxes and fees or actual loss of 
revenue finally calculated by Customs shall result in denial of the 
prior disclosure.
    (d) Effective time and date of prior disclosure--(1) If the 
documents that provide the disclosing information are sent by registered 
or certified mail, return-receipt requested, and are received by 
Customs, the disclosure shall be deemed to have been made at the time of 
mailing.
    (2) If the documents are sent by other methods, including in-person 
delivery, the disclosure shall be deemed to have been made at the time 
of receipt by Customs. If the documents are delivered in person, the 
person delivering the documents will, upon request, be furnished a 
receipt from Customs stating the time and date of receipt.
    (3) The provision of information that is not in writing but that 
qualifies for prior disclosure treatment pursuant to paragraph (a)(2) of 
this section shall be deemed to have occurred at the time that Customs 
was provided with information that substantially complies with the 
requirements set forth in paragraph (b) of this section.
    (e) Addressing and filing prior disclosure--(1) A written prior 
disclosure should be addressed to the Commissioner of Customs, have 
conspicuously printed on the face of the envelope the words ``prior 
disclosure,'' and be presented to a Customs officer at the Customs port 
of entry of the disclosed violation.
    (2) In the case of a prior disclosure involving violations at 
multiple ports of entry, the disclosing party may orally disclose or 
provide copies of the disclosure to all concerned Fines, Penalties, and 
Forfeitures Officers. In accordance with internal Customs procedures, 
the officers will then seek consolidation of the disposition and 
handling of the disclosure. In the event that the claimed ``multi-port'' 
disclosure is made to a Customs officer other than the concerned Fines, 
Penalties, and Forfeitures Officer, the disclosing party must identify 
all ports involved to enable the concerned Customs officer to refer the 
disclosure to the concerned Fines, Penalties, and Forfeitures Officer 
for consolidation of the proceedings.
    (f) Verification of disclosure. Upon receipt of a prior disclosure, 
the Customs officer shall notify Customs Office of Investigations of the 
disclosure. In the event the claimed prior disclosure is made to a 
Customs officer other than the concerned Fines, Penalties, and 
Forfeitures Officer, it is incumbent upon the Customs officer to provide 
a copy of the disclosure to the concerned Fines, Penalties, and 
Forfeitures Officer. The disclosing party may request, in the oral or 
written prior disclosure, that the concerned Fines, Penalties, and 
Forfeitures Officer request that the Office of Investigations withhold 
the initiation of disclosure verification proceedings until after the 
party has provided the information or data within the time limits 
specified in paragraph (b)(4) of this section. It is within the 
discretion of the concerned Fines, Penalties and Forfeitures Officer to 
grant or deny such requests.
    (g) Commencement of a formal investigation. A formal investigation 
of a violation is considered to be commenced with regard to the 
disclosing party on the date recorded in writing by the Customs Service 
as the date on

[[Page 261]]

which facts and circumstances were discovered or information was 
received that caused the Customs Service to believe that a possibility 
of a violation existed. In the event that a party affirmatively asserts 
a prior disclosure (i.e., identified or labeled as a prior disclosure) 
and is denied prior disclosure treatment on the basis that Customs had 
commenced a formal investigation of the disclosed violation, and Customs 
initiates a penalty action against the disclosing party involving the 
disclosed violation, a copy of a ``writing'' evidencing the commencement 
of a formal investigation of the disclosed violation shall be attached 
to any required prepenalty notice issued to the disclosing party 
pursuant to 19 U.S.C. 1592 or 19 U.S.C. 1593a.
    (h) Scope of the disclosure and expansion of a formal investigation. 
A formal investigation is deemed to have commenced as to additional 
violations not included or specified by the disclosing party in the 
party's original prior disclosure on the date recorded in writing by the 
Customs Service as the date on which facts and circumstances were 
discovered or information was received that caused the Customs Service 
to believe that a possibility of such additional violations existed. 
Additional violations not disclosed or covered within the scope of the 
party's prior disclosure that are discovered by Customs as a result of 
an investigation and/or verification of the prior disclosure shall not 
be entitled to treatment under the prior disclosure provisions.
    (i) Knowledge of the commencement of a formal investigation--(1) A 
disclosing party who claims lack of knowledge of the commencement of a 
formal investigation has the burden to prove that lack of knowledge. A 
person shall be presumed to have had knowledge of the commencement of a 
formal investigation of a violation if before the claimed prior 
disclosure of the violation a formal investigation has been commenced 
and:
    (i) Customs, having reasonable cause to believe that there has been 
a violation of 19 U.S.C. 1592 or 19 U.S.C. 1593a, so informed the person 
of the type of or circumstances of the disclosed violation; or
    (ii) A Customs Special Agent, having properly identified himself or 
herself and the nature of his or her inquiry, had, either orally or in 
writing, made an inquiry of the person concerning the type of or 
circumstances of the disclosed violation; or
    (iii) A Customs Special Agent, having properly identified himself or 
herself and the nature of his or her inquiry, requested specific books 
and/or records of the person relating to the disclosed violation; or
    (iv) Customs issues a prepenalty or penalty notice to the disclosing 
party pursuant to 19 U.S.C. 1592 or 19 U.S.C. 1593a relating to the type 
of or circumstances of the disclosed violation; or
    (v) The merchandise that is the subject of the disclosure was 
seized; or
    (vi) In the case of violations involving merchandise accompanying 
persons entering the United States or commercial merchandise inspected 
in connection with entry, the person has received oral or written 
notification of Customs finding of a violation.
    (2) The presumption of knowledge may be rebutted by evidence that, 
notwithstanding the foregoing notice, inquiry or request, the person did 
not have knowledge that an investigation had commenced with respect to 
the disclosed information.

[T.D. 98-49, 63 FR 29131, May 28, 1998; 63 FR 35798, July 1, 1998; T.D. 
99-27, 64 FR 13676, Mar. 22, 1999; T.D. 99-64, 64 FR 43267, Aug. 10, 
1999; T.D. 00-5, 65 FR 3809, Jan. 25, 2000; T.D. 00-57, 65 FR 53575, 
Sept. 5, 2000]