Answer first
Core rule
Prior-disclosure treatment requires disclosure of the violation's circumstances before, or without knowledge of, commencement of a formal investigation, plus tender of actual lost duties, taxes, and fees or revenue. The disclosure must identify the merchandise and transactions, explain the false statement or omission, provide the correct information or timely supplement it, and satisfy the tender rule. For a qualifying fraudulent violation, § 1592(c)(4) caps the penalty at 100% of the lawful duties, taxes, and fees of which the United States is or may be deprived; qualifying nonfraud violations use the statutory interest measure. A label reading 'prior disclosure' does not cure missing elements.
Authority and lookup route
Locate the rule before returning to the facts. Links point to government or official publications.
Reference lookup task
Turn § 162.74 into a timestamped checklist: initial disclosure, oral confirmation if used, unknown-data supplement, CBP loss calculation, tender, and evidence of investigation commencement. Mark every event that can defeat treatment.
Route: § 1592(c)(4) benefit → § 162.74(a) timing → § 162.74(b) content → § 162.74(c) tender → investigation knowledge
Worked example
Before learning of any formal investigation, an importer discloses a nonfraudulent valuation omission covering identified entries, provides the correct data, and tenders the $12,000 actual duty loss as required. What penalty framework replaces the ordinary negligence or gross-negligence maximum?
- 1Verify that timing, transaction identification, circumstances, correct data, and tender satisfy § 162.74.
- 2Separate repayment of the $12,000 actual loss from the civil monetary penalty.
- 3For qualifying nonfraud prior disclosure, use the statutory interest-based penalty ceiling rather than the ordinary two-times or four-times loss ceiling.
Conclusion: The importer must still tender the $12,000 loss, but qualifying nonfraud prior-disclosure penalty exposure is limited to the applicable interest measure under § 1592(c)(4), not the ordinary negligence or gross-negligence multiplier.
Common traps
- Assuming a post-entry correction automatically qualifies as prior disclosure.
- Disclosing a general problem without identifying covered transactions and the material false statements or omissions.
- Ignoring tender because the disclosure narrative was timely.
- Expanding the disclosure after CBP discovers additional violations and assuming the additions inherit the original date.