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Reconciliation

Background

In late 1993, the Modernization Act (Mod Act) was enacted, providing legal authority for reconciliation and addressing record keeping requirements and concepts such as “reasonable care” and “shared responsibility.” Specifically, the Mod Act enhances the entry summary process by allowing indeterminable information to be identified and provided to CBP at a future time. This reconciliation process, implemented as the ACS Reconciliation Prototype and now known as the ACE Reconciliation Prototype, was published on February 6, 1998.

Title VI of the North American Free Trade Agreement (NAFTA) Implementation Act (the Act), Public Law 103-182, 107 Statute 2057 (December 8, 1993), contains provisions pertaining to CBP modernization (107 Statute 2170). Subtitle B of Title VI establishes the National CBP Automation Program (NCAP)--an electronic system for processing commercial importations. Section 637 of the Act amended section 484 of the Tariff Act of 1930 to establish a new subsection (b), entitled Reconciliation, as a planned component of NCAP. Section 101.9(b) of CBP Regulations (19 CFR 101.9(b)) provides for the testing of NCAP components. (See [Treasury Decision] (TD) 95-21.) This test of the prototype is established pursuant to those regulations.

Any party who elects to reconcile entries pursuant to 19 USC 1484(b) may do so only through this prototype.

The prototype may also be used for processing post-import refund claims under 19 USC 1520(d).

The ACE Reconciliation Prototype is a step toward enhancing processing capabilities and repairing problems. Local methodologies lack the ability to respond to the growing complexities of processing international trade, CBP law mandates the use of one of only two methodologies for post-summary adjustments. Either each import shipment must be separately appraised and adjustments applied to individual entries or the ACE Reconciliation Prototype must be used. CBP has worked very closely with the trade community to design a prototype that will benefit all and will alleviate the burdens of entry-by-entry processing. The Reconciliation Prototype is national in scope, and its success will be determined by its ability to deliver a legal, financially reliable, and efficient process. With design of this prototype, CBP seeks to accomplish the following:

  • Make progress under the reconciliation component of the Mod Act.
  • Establish uniformity in an area that has operated under a variety of procedures.
  • Provide financial safeguards.
  • Institute a legal mechanism for reconciling entries.
  • Streamline CBP and business processes.

Overview

The Reconciliation Prototype allows importers to file their entry summaries using the best available information they have on file and electronically “flag” estimated elements, with the mutual understanding that CBP will receive the actual information at a later date. Importers then provide the corrected information on a new type of entry called a Reconciliation.

Reconciliation allows an importer to revise certain elements of an entry summary that were undeterminable at the time the merchandise was entered, such as, value, 9802, classification, and FTA.

As an entry, a Reconciliation may be liquidated, rejected, or change liquidated. The liquidation of a Reconciliation can be protested, just as the underlying entry summary is liquidated and that liquidation protested. The liquidation of the Reconciliation will be posted to the Bulletin Notice of Liquidation and may be protested pursuant to 19 USC 1514. However, the protest must only pertain to the issue(s) flagged for reconciliation (i.e., the protest may not revisit issues previously liquidated on the underlying entry summaries).

The ACE Reconciliation Prototype will serve as the exclusive means for reconciling post- summary adjustments to value, HTSUS Heading 9802, certain changes in classification and Free Trade Agreements (FTA). Adjustments made via a single Reconciliation result in a single bill or refund. It will replace the processes of reconciling entry summaries under block appraisement/liquidation, in which the liquidation of one or several entries affects multiple entries for an entire period. Previous methods of accomplishing similar post-entry adjustments are no longer permitted.

Participate in the Prototype

All importers are automatically eligible for participation in the ACE Reconciliation Prototype as long as they have a valid continuous bond and a valid reconciliation bond rider on file for each importer of record number that wishes to participate in the ACE Reconciliation Prototype (including the two-digit suffix). Adequate bond coverage must exist for the Reconciliation.

Participants must file the applicable underlying entry summary and Reconciliation electronically via the Electronic Data Interchange (EDI).

ACE Reconciliation will be opened to all Ports of Entry, (meaning that the Reconciliation entry (type 09) may be transmitted to any port) and processed by the Center of Excellence and Expertise.

  • If the importer is assigned to a Center, ACE will assign the Reconciliation to that Center.
  • If the importer has not been assigned to a Center but has previously filed Reconciliations, the importer will continue filing their Reconciliations entry summaries at their previously assigned Reconciliation Port of Entry with the appropriate Reconciliation team code.
  • If the importer is new to filing Reconciliation entry summaries and is not assigned to a Center, ACE will assign team number 001 at the Port of Entry for filing. If needed, CBP personnel will reassign the Reconciliation team code to the correct Center for processing.

Flagged entries filed in Puerto Rico or the U.S. Virgin Islands should be combined on their own Reconciliation entry type 09 and transmitted to the Port of Entry the flagged entries were filed at. This exist because revenue deposited on or refunded from entries filed in these two territories is handled differently.

For instance, if 500 entries were filed at port 4909 (San Juan, PR) and flagged for value Reconciliation, the trade will place all of those flagged entries on their own Reconciliation entry summary, type 09 and file Reconciliation in San Juan, Puerto Rico.

To expedite the collection process, it is recommended that payments for Reconciliation entry summaries be filed at the Port of Entry designated on the Reconciliation Entry Summary, payments made at another Port of Entry could slow down the process.

The Client Representatives are the first point of contact for importers, exporters, transportation providers, and brokers wishing to automate any of their interactions with CBP. The Client Representatives facilitate the trade's communication, testing, and operational participation with CBP’s automated systems and are the contact point for system related problems and questions from trade partners. The Client Representative Branch can be reached at 571-468-5500. Trade partners who already have a Client Representative assigned to them, should contact their assigned Client Representative directly via phone or email.

Participants are not obligated to flag entries or file Reconciliations.

The entry summary is "flagged" by the filer (either individually or blanket), thereby providing CBP a "notice of intent" to file a Reconciliation. Under the statutory mandate of 19 U.S.C. 1484, the importer is responsible for using reasonable care in declaring at entry the proper value, classification and rate of duty applicable to imported merchandise including the filing and flagging of the underlying entries and the filing of the Reconciliation.

NOTE: CBP will no longer apply blanket flags to underlying entries. Importers who wish to blanket flag entries must coordinate with their broker(s) in order to continue flagging in that manner. Importers can either flag each entry by entry manually or program software to perform blanket flagging.

Entry Summary Eligibility

The following entry types are eligible for Reconciliation under this prototype:

  • Entry type 01: Free and dutiable formal consumption entries.
  • Entry type 02: Quota/Visa consumption entries.
  • Entry type 06: Foreign Trade Zone (FTZ) consumption entries.

Entries containing merchandise subject to quota may be reconciled for all issues except classification. FTZ entries with Anti-dumping/Countervailing Duty (AD/CVD) merchandise are not currently eligible for reconciliation under this prototype. In addition, if an FTZ entry has NAFTA/US-CFTA (or certain other eligible free trade agreement) issues, the importer must ensure that the product underwent no additional processing to make it qualify for NAFTA/US- CFTA (or certain other eligible free trade agreements). That is, the product must have qualified for NAFTA/US-CFTA (or certain other eligible free trade agreements) in the same condition as the time it entered the FTZ.

Entry summaries may be flagged for any of the issues listed below or any combination of the four:

  • Value
  • 9802
  • Classification, (for ONLY those issues pending ruling, protest or court action)
  • 520(d): NAFTA/FTA and certain other eligible Free Trade Agreements

Time for Filing

FTA/NAFTA:

  • Twelve (12) months from the date of importation of the oldest entry summary flagged.

Value/Classification/9802:

  • Twenty-one (21) months from the date of entry summary of the oldest entry summary flagged.

No extensions will be allowed on the deadlines for filing Reconciliations.

Additional Information

Last Modified: Jun 01, 2023