Indirect Payments are payments made by the buyer to someone other than the seller that nonetheless flow to the seller's benefit. Under 19 U.S.C. § 1401a(b)(4)(A) and 19 CFR § 152.103(a)(2), indirect payments are part of the price actually paid or payable for the imported merchandise — even when they don't appear on the commercial invoice.
Common forms of indirect payment include:
- Settlement of the seller's debt to a third party (e.g., the buyer pays the seller's bank or supplier directly)
- Discharge of a seller's obligation through offset or set-off
- Payments to a related party of the seller that benefit the seller (e.g., to a foreign parent or affiliate)
- Free or reduced-price assists that, while categorized separately under assists, are economically indirect payments
Indirect payments are easily missed because they don't appear on the commercial documentation accompanying the entry. They typically surface in:
- Focused assessments and audits
- Prior disclosure reviews
- Value reconciliation filings
- Related-party transfer pricing reviews
For related-party transactions, indirect payments are especially common because the buyer, seller, and a third affiliate may all be under common control — making it easy for value to be transferred outside the invoiced sale.
Failure to report an indirect payment understates customs value and can result in additional duties, interest, and penalties under 19 U.S.C. § 1592.