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CBP Developing New Risk Models to Address AD/CVD Collections Issues, but More Action Needed, GAO Says

CBP has taken some steps toward addressing a shortfall in antidumping and countervailing duty collections, but will need to continue to strengthen its collection process and implement a risk model for bonding that is currently in development to fully address the ongoing issue, the Government Accountability Office said in a report released Nov. 7.

According to GAO’s analysis, while CBP collects most of the AD/CV duty bills it issues, it does not collect most of the value of those AD/CV duty bills. That’s because, for fiscal years 2001-18, while almost all bills up to $10,000 are collected on, only about two-thirds of bills between $10,000 and $50,000 are collected, and more than 80 percent of bills over $50,000 go unpaid. Only 20 importers represented about 43 percent of the uncollected duty amount, the report said.

Many of the same issues were detailed in a 2016 report issued by GAO (see 1608160032), and CBP has taken steps since then to address its collections problem. CBP has developed two new statistical models that better account for non-payment risk, using risk factors including the type of good, country of origin, and whether the importer is from a foreign country. One test of the models found they could have predicted over 95 percent of delinquent importers in fiscal years 2016 and 2017. CBP has requested $17 million in fiscal year 2020 funds to “make updates to its information systems necessary to facilitate the implementation of the statistical models,” GAO said.

CBP is also in the process of developing a risk-based framework for setting continuous and single transaction bond amounts, “but industry members have expressed concerns about associated costs,” GAO said. CBP tested a new risk-based formula for continuous bonds in April 2018, and found its collection rate would have been “significantly higher” in fiscal years 2007-17 if had been using the method.

CBP has also taken steps toward improving its actual collections process. The agency implemented a pilot whereby it hired two collections agencies in 2016 to collect unpaid bills, though the collections agencies faced similar problems as CBP. “The project has not yielded results and both collection agencies have decided not to continue their collection efforts for CBP. CBP is reconsidering the viability of this project,” CBP said. CBP’s new Form 5106 and proposed regulations that would set minimum requirements for brokers to verify importers’ identities should also help address the problems, the report said.