CSMS Message: 99-000301

TO : ALL ABI BROKERS.

FROM : DON LUTHER

SUBJECT : RECONCILIATION - LATE STARTS

DATE : 04/19/1999

APRIL 16, 1999

CATEGORY: ENT FO:TP:I:CC DL

TO : ASSISTANT PORT DIRECTORS, TRADE OPERATIONS
ACCOUNT MANAGERS

FROM : DIRECTOR
TRADE PROGRAMS

CC : STC DIRECTORS, DIRECTORS OF FIELD OPERATIONS, PORT
DIRECTORS

PASS
TO : IMPORT SPECIALISTS, ENTRY PERSONNEL, AUDITORS,
IMPORTERS, BROKERS, OTHER INTERESTED PARTIES

RE : RECONCILIATION PROTOTYPE POLICY ON LATE STARTS

THE ACS RECONCILIATION PROTOTYPE STARTED ON OCTOBER 1, 1998. THE
GOALS OF THIS PROTOTYPE INCLUDE PROVIDING A LEGAL, FISCALLY SOUND
MECHANISM FOR MAKING POST-SUMMARY VALUE ADJUSTMENTS TO ENTRIES,
AND TO STOP THE USE OF CERTAIN UNOFFICIAL LOCAL PRACTICES THAT
LACK LEGAL AUTHORITY.

CUSTOMS POLICY ON THIS MATTER IS THAT THE ACS RECONCILIATION
PROTOTYPE IS THE EXCLUSIVE MEANS TO MAKE CERTAIN EN MASSE
ADJUSTMENTS TO ENTRY SUMMARIES. TO MAKE THE TRANSITION PROCESS
MORE TOLERABLE AND REALISTIC, CUSTOMS ADOPTED A "GRANDFATHER
CLAUSE" POLICY ON SEPTEMBER 21, 1998. THIS POLICY PROVIDED FOR A
MORE GRADUAL PHASE-IN OF THE NEW RECONCILIATION PROCESS. FOR
EXAMPLE, IMPORTERS WHOSE FISCAL REPORTING PERIOD BEGAN IN JANUARY
WERE NOT SUBJECT TO THE "EXCLUSIVE MEANS" POLICY UNTIL JANUARY 1,
1999.

WE ARE PLEASED THAT A GREAT NUMBER OF IMPORTERS HAVE APPLIED AND
BEGUN PARTICIPATING IN THE RECONCILIATION PROTOTYPE. MANY OF
THEM TOOK ADVANTAGE OF THE "GRANDFATHER CLAUSE" POLICY AND BEGAN
THEIR RECONCILIATION FLAGGING IN JANUARY OR APRIL, COINCIDING
WITH THE BEGINNING OF THEIR FISCAL REPORTING PERIODS.

THIS IS A NEW AND COMPLEX PROTOTYPE, HOWEVER, AND THINGS DO NOT
ALWAYS GO EXACTLY AS THEY SHOULD. FOR VARIOUS REASONS, SOME
IMPORTERS HAVE NOT STARTED FLAGGING SUMMARIES FOR RECONCILIATION
OR STARTED LATER THAN THE BEGINNING OF THEIR REPORTING PERIOD.
WE KNOW THAT A NUMBER OF IMPORTERS HAVE EXPERIENCED DIFFICULTIES
AND DELAYS IN OBTAINING THE REQUIRED BOND RIDER. OTHERS HAD
PROBLEMS WITH SOFTWARE THAT DELAYED THEIR ABILITY TO BEGIN
FLAGGING. SOME STARTED LATE DUE TO CONFUSION ABOUT THE STATUS OF
THEIR APPLICATIONS.

OVER THE PAST FEW WEEKS, CUSTOMS HAS ANALYZED THE IMPACT OF THIS
SITUATION, AND WHAT IT MEANS TO THE TRADE COMMUNITY AND OUR OWN
FIELD OFFICES. THE POLICY HAS BEEN THAT AFTER A COMPANY'S
"EXCLUSIVE MEANS" DATE, CORRECTIONS TO ENTRY SUMMARIES NOT
FLAGGED FOR RECONCILIATION WOULD BE ALLOWED ONLY VIA THE LEGAL
AND OFFICIAL METHODS WE HAVE SPECIFIED, SUCH AS PRIOR
DISCLOSURES, SILS, PROTESTS AND EXTENSIONS OF LIQUIDATION.

CUSTOMS HAS NO CHOICE BUT TO ADHERE TO THE "EXCLUSIVE MEANS"
POLICY, BUT REALIZES THAT THESE DELAYS HAVE LARGELY BEEN OUTSIDE
THE CONTROL OF THE IMPORTERS AND THEIR BROKERS. FOR THIS REASON,
WE ARE GRANTING, IN CERTAIN SITUATIONS, A ONE TIME ONLY EXTENSION
OF THE "GRANDFATHER CLAUSE" PERIOD.

THE SPECIFICS OF THIS ARE AS FOLLOWS:

IF, BY MAY 14, 1999, AN IMPORTER HAS APPLIED, HAS THEIR BOND
RIDER ON FILE WITH CUSTOMS, AND HAS ENTRY SUMMARIES BEING
FLAGGED FOR RECONCILIATION, THE "GRANDFATHER CLAUSE" PERIOD
IS EXTENDED FOR THAT IMPORTER, TO INCLUDE THE PERIOD FROM
OCTOBER 1, 1998, UNTIL THE SUMMARY DATE OF THEIR EARLIEST
ENTRY SUMMARY FLAGGED FOR RECONCILIATION.

THE IMPORTER, DIRECTLY OR VIA THEIR BROKER, MUST NOTIFY THE
RECONCILIATION TEAM AT CUSTOMS HEADQUARTERS OF THEIR INTENT
TO TAKE ADVANTAGE OF THIS EXTENSION, BY PROVIDING THE RANGE
OF DATES DURING WHICH SUMMARIES SHOULD HAVE BEEN FLAGGED IF
THEY HAD THE ABILITY TO DO SO. THE RANGE OF DATES, AND THE
IMPORTER OF RECORD NUMBER (AT THE FULL 11-DIGIT SUFFIX
LEVEL) MUST BE PROVIDED TO THE RECONCILIATION TEAM BY JUNE
1, 1999. THIS INFORMATION MAY BE SENT VIA FAX TO (202) 927-
1096, OR VIA E-MAIL TO: DON.P.LUTHER@CUSTOMS.TREAS.GOV. IF
E-MAIL IS USED, THE SUBJECT LINE OF THE MESSAGE SHOULD BEGIN
WITH "RECONEXT" TO ALLOW THE MESSAGES TO BE SORTED.

IMPORTERS WHO COMPLY WITH THE FLAGGING AND NOTIFICATION
REQUIREMENTS ABOVE WILL BE ALLOWED TO FILE ADJUSTMENTS TO
THEIR ENTRY SUMMARIES FILED DURING THE EXTENDED "GRANDFATHER
CLAUSE" PERIOD IN ACCORDANCE WITH LOCAL PROCEDURES IN EFFECT
PRIOR TO THE START OF THE ACS RECONCILIATION PROTOTYPE.

AS BEFORE, PORT DIRECTORS HAVE DISCRETION TO MANAGE THESE
LOCAL PROCEDURES AND PRESCRIBE FORMATS AND SUPPORTING DATA
REQUIREMENTS.

ENTRY SUMMARIES FILED AFTER MAY 14, 1999, WILL NOT IN ANY CASE BE
ALLOWED CORRECTION OUTSIDE THE RECONCILIATION PROTOTYPE OR ITS
AUTHORIZED ALTERNATIVES. AS WE HAVE SAID BEFORE, THESE
UNOFFICIAL PRACTICES MUST AND WILL CEASE.

CORRECTIONS TO ENTRY SUMMARIES FILED AFTER MAY 14, 1999 WHICH ARE
NOT FLAGGED FOR RECONCILIATION, MUST BE MADE VIA THE OFFICIAL
METHODS WE HAVE SPECIFIED ABOVE AND THROUGHOUT THE RECONCILIATION
LITERATURE.

FOR THOSE VERY FEW IMPORTERS WHOSE LEGITIMATE "GRANDFATHER
CLAUSE" START DATE IS LATER THAN MAY 14, 1999, THAT START DATE IS
STILL IN EFFECT. NATURALLY, AFTER SEPTEMBER 1, 1999, THE
"EXCLUSIVE MEANS" POLICY IS IN FULL EFFECT, WITHOUT EXCEPTION.

SITUATIONS WHERE IMPORTERS DO NOT EVER PARTICIPATE, OR BEGIN
PARTICIPATION AT A DATE LATER THAN THESE POLICIES WOULD ALLOW,
WILL BE EVALUATED IN TERMS OF GENERAL NOTIONS OF REASONABLE CARE
IN IMPORT COMPLIANCE.

APPLICATIONS FOR PARTICIPATION WILL BE ACCEPTED THROUGHOUT THE
DURATION OF THE PROTOTYPE, WHICH CURRENTLY IS SCHEDULED TO RUN
UNTIL SEPTEMBER 30, 2000, AND MAY BE EXTENDED.

QUESTIONS ON THE POLICIES DESCRIBED HEREIN, OR RECONCILIATION IN
GENERAL, MAY BE DIRECTED TO DON LUTHER AT (202) 927-0915, OR
SHARI MCCANN AT (202) 927-1106. INFORMATION IS ALSO AVAILABLE
VIA THE CUSTOMS INTERNET WEB SITE FOR RECONCILIATION, AT:

WWW.CUSTOMS.USTREAS.GOV/IMP-EXP2/COMM-IMP/RECON/INDEX.HTM

/S/
ELIZABETH G. DURANT