Use of First Sale, CBP Scrutiny Increasing Due to Section 301 Tariffs, Law Firm Says
More CBP scrutiny of first sale transactions has followed an increase in the use of first sale valuations in recent months, law firm Sandler Travis said in a blog post. The growth in first sale valuations, which allows importers to value goods at the price sold from a manufacturer to a middle man, is one result of the Section 301 tariffs on goods from China, the firm said. "At a time when volatility in trade policy has left some traditional methods of lowering costs unavailable and is threatening to eliminate others, importers are continuing to use the first sale rule to save millions of dollars in import duties each year," said the firm, which advertises its first sale services in the post.
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The new tariffs "forced many companies to quickly implement a first sale program, often without sufficient time to perform an adequate review of the underlying transactions," the firm said. Sandler Travis lawyer Mark Tallo said "CBP is now targeting the use of first sale by industries that have previously been subject to very low or no duty and focusing on the proper transfer of title and risk of loss to ensure middleman companies are bona fide buyers and sellers of imported goods." The agency "is also continuing to scrutinize related party pricing to confirm that any first sale price between related parties is not influenced by that relationship and is otherwise conducted at arm’s length,” he said. Assist valuations and supplemental payments are also getting closer looks from CBP, Tallo said.