Goods imported into the United States are often subject to tariffs, which vary depending on the type of good imported and country of origin. Unscrupulous importers often resort to deception and fraud to avoid paying the full duties owed to the government. This is becoming increasingly prevalent in today’s climate of escalating trade wars and rising tariffs. Typical schemes include the following:
Misclassification of Goods
Import duties are determined by product schedules published by the United States government. Some importers fraudulently change the tariff codes of the goods they import to codes of products that are subject to a lower duty. Such conduct is illegal and actionable under the False Claims Act.
The amount of a given customs duty depends on the declared value of the imported goods. Corrupt importers often avoid paying the full amount due by declaring a value that is significantly lower than the actual value of the goods. Those who engage in this practice are subject to significant liability under the False Claims Act.
Trade Re-Shipping and Re-Labeling
The amount of a duty owed is dependent on which country the imported goods originated from. Goods from China, for example, typically carry heftier duties than goods from Mexico. Some importers attempt to avoid larger tariffs by shipping goods through an intermediary in another country and relabelling the goods as originating from that country. This is, of course, fraud and constitutes a violation of the False Claims Act.