The government is offering huge whistleblower rewards for reporting import duty fraud or customs fraud against those who lie about the amount of import duties owed on goods being imported to the U.S. So far, customs fraud has been hiding under the radar because the government is ill-equipped to detect those cheating on paying import duties on products or goods imported into the U.S. But now, the Department of Justice is offering whistleblower rewards to anyone with inside information regarding companies engaging in fraud schemes to pay less import duties than owed.
Here’s how it works. If a company you work for a company that imports a substantial amount of goods from any other country, such as China or Japan, they must pay import duties using schedules based on the value and type of goods being imported into the U.S., and if they cheat, you can get a reward for properly reporting it.
Rewards for reporting fraudulent misclassifying imported goods
To avoid paying the amount of import duties owed, some companies cheat by misclassify the products being imported. In other words they lie about the type of product being imported and claim it is a similar product that is valued less on the schedule. A similar fraud scheme is undervaluing the product or goods, by claiming that they are worth less than the true value. Another variation of this type of import duty fraud scheme is miscounting or claiming there are fewer numbers of products being imported.
Here’s an example. Suppose XYZ imports furs into the U.S., and that the true import duty on the furs should be $250,000. To avoid the duty, the company claims that the furs are synthetic and not subject to the same duty. Perhaps they also lie about the number of furs being shipped. You could get a reward for reporting either of these fraud schemes.
Rewards for reporting “dumping” products into the U.S.
Some companies engage in entirely different import duty or customs fraud schemes of misstating the country of origin in order to avoid antidumping duties.
The term “dumping” generally means the selling of goods in the U.S. at prices lower than that which the same goods are sold in the domestic market of the exporting company. For instance, a country might subsidize the manufacturing costs of a product to allow it to be exported to the U.S. at a lower price in order to stimulate the economy of their country by increasing production. An example of anti-dumping duty would be if it cost $200 to build a computer in China, but the Chinese government subsidized the manufacturer $100 per laptop that they export to the U.S. The $100 per laptop would be subject to anti-dumping duties. In other words, it is an unfair trade practice, which can make the cost of products artificially cheaper in the U.S. than products made in either the domestic company or the U.S. Therefore, there are U.S. laws imposing a special import duty upon products that are sold in the U.S. for less than they are sold in their own country.
Amount of rewards for reporting import duty fraud
Not only is reporting customs fraud the right thing to do because it’s not fair to hard working Americans to bring in imported goods without paying the proper import duties, but the whistleblower reward statute pays awards of between 15% and 25% of the amount of fraudulently underpaid import duties you help the government collect. If the company is routinely engaged in customs fraud, the amount of fraud can rise pretty fast. Assuming that the amount of import duties is underpaid by $5 million, you could get a reward of close to $1 million if you properly report the import fraud scheme. That gives you plenty of good reasons to report import duty fraud or customs fraud.