Penalties Under 19 USC 1592

19 USC 1592 establishes three levels of culpability for customs violations: (1) Negligence — failure to exercise reasonable care; (2) Gross Negligence — acts done with actual knowledge or wanton disregard; (3) Fraud — intentional violation with willful intent to defraud the revenue. Each level carries different maximum penalty amounts. The burden of proof for fraud lies with the government; for negligence and gross negligence, it shifts to the alleged violator.

For fraud: the domestic value of the merchandise. For gross negligence: the lesser of the domestic value or 4 times the loss of duties (or 40% of dutiable value if no duty loss). For negligence: the lesser of the domestic value or 2 times the loss of duties (or 20% of dutiable value if no duty loss). These are maximum amounts — actual penalties assessed are typically lower based on CBP's mitigation guidelines.

The 'reasonable care' standard is the benchmark against which negligence is measured. Importers are expected to exercise reasonable care in all aspects of customs transactions. This includes: verifying the accuracy of entry information, maintaining proper records, employing knowledgeable staff, consulting with licensed customs brokers, and using the CBP ruling process when classification or valuation is uncertain.