Abady Law Firm, P.C. – Customs and Import/Export Attorney Blog
Learn the Basics of Customs and International Trade Policy and Procedure
Archive for the "Exporting" Category
The question of whether one is permitted to export a vehicle from the United States to a foreign buyer (in China, Dubai, etc) is a tricky one. Over the last few years there have been cases of federal officials seizing vehicles and cash associated with the business of exporting vehicles. News articles and government press releases of such scenarios have been reported on:
U.S. Targets Buyers of China-Bound Luxury Cars (February 11, 2014)
Man accused of identity theft, fraud in car scheme arrested (March 18, 2015)
Exporting luxury cars is lucrative, legally questionable (August 6, 2014)
U.S. authorities are cracking down on oversea auto exporters (October 2, 2014)
Investigators pursue luxury car exporters (January 17, 2015)
Inside Stories From the War Between Automakers And Dealers Over Exports (February 12, 2016).
In United States v. Content of Wells Fargo Bank, et al, the court ordered the federal government to return money and vehicles it seized from an automotive export business that sold luxury vehicles to the overseas market. The government argued that there were federal wire fraud laws violated by using foreign money to defraud American car dealers into selling them vehicles that were intended to stay in the United States. Specifically, luxury vehicle dealers are prohibited by their manufacturers from selling cars for export. Dealers have the purchaser sign a contractual agreement stating that the cars are not to be exported. In order the facilitate the purchase of luxury vehicles the automotive export company used “straw buyers” to purchase said vehicles (if the same purchaser walked into the same dealership multiple times to purchase luxury vehicles the dealership may get suspicious and prohibit the sale) and thereafter shipped them overseas. The court held that the government could not establish probable cause to believe that the funds seized are the “proceeds” of wire or mail fraud. The court reasoned that the misrepresentation was only a civil matter (not criminal) because the party deceived by a material misrepresentation (dealer) is NOT the same party injured (manufacturer). Therefore, the court ordered the immediate release of seized funds and vehicles.
While this decision may protect one from criminal liability there is still the question of civil liability. In an article written by Automotive News entitled Dealer scores in suit against illegal exporters over 100 vehicles were purchased and exported overseas without the dealer’s knowledge. As a result, the dealer violated its franchise agreement (which prohibited the sale of vehicles for export) and was liable to reimburse the manufacturer for incentive money it did not qualify for. Thereafter, the dealer filed suit against the purchasers and a jury found in favor of the dealer under claims of fraud, breach of contract, and intentional misrepresentation or concealment and violation of the RICO act.
Based on these cases, one must be careful in conducting an auto export business.
In addition, U.S. Customs and Border Protection (“Customs”) provides a list of regulations on its website regarding the export of vehicles here. One important point is the definition of “used” vehicles for purposes of filings in the Automated Export System (“AES”). For example, you go into a dealership and purchase a vehicle. You drive it off the lot, is it now considered a “used” vehicle? Further, the distinction between a “new” versus “used” and “titled” versus “untitled” vehicle correlates to the type of documentation needed to be provided to Customs.
With respect to the definition of “used”:
- Used. “Used” refers to any self-propelled vehicle the equitable or legal title to which has been transferred by a manufacturer, distributor, or dealer to an ultimate purchaser.
- Ultimate Purchaser. “Ultimate Purchaser” means the first person, other than a dealer purchasing in his capacity as a dealer, who in good faith purchases a self-propelled vehicle for purposes other than resale.
A mistake in the designation of a vehicle as “new” versus “used” in the AES can result in the seizure of said vehicles. Thus, it is vital that one carefully reviews the Customs regulations prior to export.
For more information about this blog post, please contact Abady Law Firm, P.C. and speak with our customs lawyer at (800) 549-5099. Also visit www.customsesq.com to chat with a customs lawyer — who has insight into Exporting Vehicles — about your company’s export situation and to schedule a consultation. To chat with us, click the bottom right corner tab of our homepage.
We are seeing many Automated Export System (“AES”) violations as of late, especially with FedEx, DHL, and UPS shipments. As a result, please find information below regarding the export regulations and enforcement by U.S. Customs and Border Protection (“CBP”).
What is the Automated Export System?
CBP published the Trade Act regulations in the Federal Register on December 5, 2003. The rule requires advance transmission of electronic cargo information to CBP for both arriving and departing cargo. In the Federal Register notice, CBP identified the AES as the system for transmission of advance electronic export data for all modes of transportation.
On June 2, 2008, the U.S. Census Bureau published amendments to Title 15, Code of Federal Regulations, Part 30, Foreign Trade Regulations, mandating the filing of export information by the U.S. Principal Party in Interest (“USPPI”) or its authorized agent through the AES or AESDirect for all shipments where a Shipper’s Export Declaration (“SED”) was previously required. SED information filed to AES became known as Electronic Export Information (“EEI”).
When do you need to prepare the EEI formerly SED to be filed with CBP?
- Shipment of merchandise under the same Schedule B commodity number is valued at more than US$2,500 and is sent from the same exporter to the same recipient on the same day. (Note: Shipments to Canada from the U.S. are exempt from this requirement.)
- The shipment contains merchandise, regardless of value, that requires an export license or permit.
- The merchandise is subject to the International Traffic in Arms Regulations, regardless of value.
- The shipment, regardless of value, is being sent to Cuba, Iran, North Korea, Sudan or Syria.
- The shipment contains rough diamonds, regardless of value (HTS 7102.10, 7102.21 and 7102.31)
What happens if you fail to file the EEI or file the EEI late?
The absence or late filing of the Electronic Export Information in the Automated Export System (AES) or late filing of AES commodity data subjects the shipment to seizure.
If my goods get seized by U.S. Customs for an AES violation what do I do?
Read the following blog post for details about the U.S. Customs seizure process here and contact a professional experienced in such matters.
Additionally, look for the following language in your Notice of Seizure and Information to Claimants Non-CAFRA Form that would indicate an alleged AES violation:
For more information about this blog post, please contact Abady Law Firm, P.C. and speak with our customs lawyer at (800) 549-5099. Also visit www.customsesq.com to chat with a customs lawyer — who has insight into the Notice of Seizure — about your company’s export situation and to schedule a consultation. To chat with us, click the bottom right corner tab of our homepage.
On May 30, 2013, the U.S. government issued a General License on the export of electronic devices such as, cellphones, laptops, computers, and wireless routers to Iran. This effectively ended a ban that has been in place since 1992. According to the Department of Treasury’s press release “this General License aims to empower the Iranian people as their government intensifies its efforts to stifle their access to information.” Pursuant to 31 C.F.R. Part 560 the General License does not authorize the export of any listed equipment to the Iranian government or to any individual or entity on the Specially Designated Nationals (SDN) list.
If you have any questions about the specifics of this regulation or would like to begin exporting authorized electronic devices or any other types of goods to Iran contact us at 347-512-9007 for legal assistance.
The Office of Foreign Assets Control (OFAC) of the US Department of the Treasury administers and enforces economic and trade sanctions based on US foreign policy and national security goals against targeted foreign countries and regimes, terrorists, international narcotics traffickers, those engaged in activities related to the proliferation of weapons of mass destruction, and other threats to the national security, foreign policy or economy of the United States. OFAC acts under Presidential national emergency powers, as well as authority granted by specific legislation, to impose controls on transactions and freeze assets under US jurisdiction. Many of the sanctions are based on United Nations and other international mandates, are multilateral in scope, and involve close cooperation with allied governments.
Baseball and Cuba are synonymous. Cuba has been known to develop top talent in Major League Baseball. Such names include Rafael Palmeiro, Jose Canseco, Minnie Miñoso, and Camilo Pascual. However, given the lack of diplomatic relations between the United States and Cuba it has been difficult for Cuban nationals to represent their homeland. When a player decides to defect from Cuba, he has made his choice between the two countries. Today, top Cuban Major League players include Yoenis Céspedes, Aroldis Chapman, and Leonys Martin. In order to sign with a major league team these Cuban baseball players had to first present either an unblocking license from the U.S. Office of Foreign Assets Control (OFAC) or two permanent residency documents from another country. See 31 C.F.R. 515.505 below:
(a) General license unblocking certain persons. The following persons are licensed as unblocked nationals, as that term is defined in § 515.307 of this part:
(1) Any individual who:
(i) Has taken up residence in the United States;
(ii) Is a United States citizen, a permanent resident alien of the United States, or has applied to become a permanent resident alien of the United States and has an adjustment of status application pending; and
(iii) Is not a specially designated national; and
(2) Any entity that otherwise would be a national of Cuba solely because of the interest therein of an individual licensed in paragraph (a)(1) of this section as an unblocked national.
(b) Specific licenses unblocking certain individuals who have taken up permanent residence outside of Cuba. Individual nationals of Cuba who have taken up permanent residence outside of Cuba may apply to the Office of Foreign Assets Control to be specifically licensed as unblocked nationals. Applications for specific licenses under this paragraph should include copies of at least two documents indicating permanent residence issued by the government authorities of the new country of permanent residence, such as a passport, voter registration card, permanent resident alien card, or national identity card. In cases where two of such documents are not available, other information will be considered, such as evidence that the individual has been resident for the past two years without interruption in a single country outside of Cuba or evidence that the individual does not intend to, or would not be welcome to, return to Cuba.
For more information regarding OFAC as it relates to baseball contact us at 347-512-9007.
When a entity is presented with the question of whether a good or service falls under the Commerce Control List (“CCL”) or the United States Munitions List (“USML”) they may proceed for a commodity jurisdiction request (“CJ”). The U.S. government applies different licensing procedures and policies depending on above jurisdiction.
The Bureau of Industry and Security (“BIS”) is the licensing agency for exports subject to the Export Administration Regulations (“EAR”) containing the CCL. The Department of State Directorate of Defense Trade Controls (“DDTC”) is the licensing agency for exports subject to the the Arms Export Control Act (“AECA”) and the International Traffic in Arms Regulations (“ITAR”); the ITAR contains the USML.
Once a CJ is submitted the DDTC will make a determination as to its licensing authority. This determination is not a license or approval to export an item or perform a service; one must still gain the appropriate approval from BIS or DDTC prior to export. The timetable for the processing of a CJ varies depending on the complexity of the request and the recommendations of the reviewing agencies. However, the DDTC estimates that requests should be answered within 60 days.
Proper export control determination is a fundamental and vital step in export compliance. The consequences for an incorrect jurisdiction may result in large fines and a list of mandated remedial export compliance control measures. Moreover, a wrong CJ puts the United States’ national security at risk. Thus, it is important to identify potential issues and if unsure as to the CJ, ASK QUESTIONS. Steps should be taken to ensure that your company has written procedures in place to alleviate risk. Moreover, a company should ensure that it has proper record keeping methods in place because one is required to retain records of exports for the previous five (5) years. Finally, experts should be consulted to confirm that the information your company possess is accurate and comprehensive. As the saying goes, ‘An ounce of prevention is worth a pound of cure.‘
You may contact us at 347-512-9007 for any questions or concerns regarding export compliance.
How to obtain a refund of sales tax paid while visiting the United States
In general, states within the United States provide an exemption from sales and use tax on tangible personal property purchased in that particular state and thereafter exported to another country. This is would be beneficial for those who travel to the United States from foreign countries and hand carry their goods; however, only Louisiana and Texas currently offers refund of sales tax in such cases.
Other than hand carry, the process for applying for a sales tax refund may be different, depending on the state you have purchased the goods from. In certain situations it may make economic sense (i.e. shipping fees and import duties at the country of destination) to make large purchases in the United States and have them shipped by carrier to your foreign address.
For example: Mr. Doe buys $100,000.00 worth of products in New York and pays 8.875% in sales tax equalling $8,875.00, Shipping those goods to and paying import duties (as opposed to hand carry in luggage) in Hong Kong is only $2,500.00. As long as Mr. Doe keeps all his receipts and shows proof of export for said products Mr. Doe would get back $6,375.00 from the New York State Tax Department. Thus, instead of paying $108,875.00 (cost of products including tax) he would only end up paying $102,500.00 for those products.
*It may also make sense if you are traveling with a group of people to consolidate a shipment all together to a foreign destination in order to benefit from a sales tax refund.
To get the sales tax refunded one must keep all shipping documentation as evidence that the goods left the United States. Shipping documentation may include a U.S. Postal Service, UPS, FedEx receipt, or a freight forwarder’s receipt and a copy of the original bill of lading issued by a licensed carrier describing the goods to which a refund will be requested.
Keep in mind that the requirements are comprehensive and there may be a limited period of time to which one may be permitted to request a sales tax refund. Further, the wait time for the refund can take months. Thus, it may be beneficial to contact an attorney who has experience in this area.
Contact us today for legal assistance is preparing an application for the return of sales tax paid on exported goods.