Prior Disclosure is a voluntary statement by an importer (or other party) to CBP acknowledging past customs violations — typically Section 1592 violations involving misclassification, undervaluation, or false statements. A properly filed prior disclosure substantially reduces or eliminates penalties that would otherwise apply.
Statutory benefits (19 U.S.C. § 1592(c)(4)):
- Fraud — maximum penalty reduced from the domestic value of the merchandise to 1× the lost duties, taxes, and fees
- Gross negligence — maximum penalty reduced to interest on the unpaid duties, or 1× the lost duties (whichever is less)
- Negligence — maximum penalty reduced to interest on the unpaid duties, or 0.5× the lost duties (whichever is less)
In all cases, the importer must also tender the actual duties, taxes, and fees owed (with interest) along with the disclosure.
Requirements for valid disclosure (19 CFR § 162.74):
- Filed before CBP commences a formal investigation or audit of the disclosed conduct
- Identifies the specific entries (or describes a class of entries with sufficient detail)
- Identifies the violations — misclassification, undervaluation, false origin claims, etc.
- Discloses the circumstances of the violation
- Tenders the unpaid duties, taxes, and fees (or provides a timeline for tender)
Self-investigation. Most prior disclosures involve a self-audit period where the importer reviews entries for the look-back period (typically 5 years from the disclosure date). The disclosure includes a detailed schedule of affected entries, the calculated underpayment, and proposed remediation.
Pre-disclosure vs. perfected disclosure. Importers often file an initial "pre-disclosure" identifying the issue at a high level, then file a perfected disclosure within 30-60 days providing the full entry-level detail and tender.
Prior disclosure is one of the most important compliance tools — proactively disclosing errors before CBP discovers them through audit can save millions in penalty exposure.