What This Bill Does
This bill increases financial penalties for people who commit customs fraud or gross negligence (carelessness that shows extreme lack of care) when importing goods into the United States. The bill also allows private businesses to sue people who commit customs fraud, and prevents people convicted of these violations from importing goods for a set period of time.
Who It Affects
Importers (people bringing goods into the US), their affiliated companies (businesses they own or control), businesses that make or sell competing goods in the US, labor unions representing workers in those industries, and trade associations representing those businesses.
Key Provisions
- People who commit fraudulent customs violations must pay a penalty equal to three times the value of the goods imported, and cannot import merchandise for five years after a final court judgment (Sec. 2)
- People who commit grossly negligent customs violations must pay a penalty equal to three times the value of the goods imported, and cannot import merchandise for two years after a final court judgment (Sec. 2)
- Private businesses harmed by customs fraud can sue the violator in federal court and recover their losses plus three times that amount in additional penalty, plus their lawyer fees and court costs (Sec. 3)
- If someone buys from multiple related companies that violated customs laws, the law assumes that buyer knew about the violation when buying from the second and later companies (Sec. 2)
- People convicted of customs fraud or gross negligence, and their affiliated companies, cannot participate in the importer of record program (Sec. 4)
What Changes
The penalties for fraudulent and grossly negligent customs violations increase substantially. Courts can now ban violators from importing goods for years. Private businesses gain the right to sue customs violators directly in federal court without waiting for government action. The importer of record program (a system allowing businesses to import goods) becomes closed to anyone convicted of these violations and their related companies.
Important Definitions
"Affiliated person" means a person with a formal ownership or control relationship as defined in section 771(33) of the Tariff Act of 1930 (Sec. 4). "Interested party" means a US manufacturer, producer, or wholesaler of similar goods, a certified labor union representing workers in that industry, or a trade association whose members make similar goods (Sec. 3). "Competing merchandise" means goods that compete with or are substitutes for illegally imported merchandise (Sec. 3). "Like merchandise" means goods that are the same as, or most similar to, illegally imported merchandise (Sec. 3).
Effective Date
Not specified in bill text
II
118TH CONGRESS
1ST SESSION
S. 805
To amend the Tariff Act of 1930 to increase civil penalties for, and improve
enforcement with respect to, customs fraud, and for other purposes.
IN THE SENATE OF THE UNITED STATES
MARCH 15, 2023
Mr. BROWN (for himself and Mr. TILLIS) introduced the following bill; which
was read twice and referred to the Committee on Finance
A BILL
To amend the Tariff Act of 1930 to increase civil penalties
for, and improve enforcement with respect to, customs
fraud, and for other purposes.
Be it enacted by the Senate and House of Representa-
1
tives of the United States of America in Congress assembled,
2
SECTION 1. SHORT TITLE.
3
This Act may be cited as the ‘‘Fighting Trade Cheats
4
Act of 2023’’.
5
SEC. 2. INCREASE IN CIVIL PENALTIES FOR FRAUDULENT
6
AND GROSSLY NEGLIGENT VIOLATIONS OF
7
UNITED STATES CUSTOMS LAWS.
8
Section 592 of the Tariff Act of 1930 (19 U.S.C.
9
1592) is amended—
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•S 805 IS
(1) in subsection (a)—
1
(A) by redesignating paragraph (2) as
2
paragraph (3); and
3
(B) by inserting after paragraph (1) the
4
following:
5
‘‘(2) PRESUMPTION.—
6
‘‘(A) IN GENERAL.—For purposes of para-
7
graph (1)(B), if a person purchases merchan-
8
dise from two or more affiliated persons after
9
such persons are determined by U.S. Customs
10
and Border Protection or a court of competent
11
jurisdiction to have violated subsection (a) by
12
means of fraud or gross negligence, there shall
13
be a presumption that the purchaser had knowl-
14
edge of such violation with respect to purchases
15
from the second or subsequent such affiliated
16
person.
17
‘‘(B) AFFILIATED PERSON DEFINED.—In
18
subparagraph (A), the term ‘affiliated person’
19
has the meaning given that term in section
20
771(33).’’; and
21
(2) in subsection (c)—
22
(A) in paragraph (1)—
23
(i) by striking ‘‘A fraudulent viola-
24
tion’’ and inserting the following:
25
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•S 805 IS
‘‘(A) IN
GENERAL.—A fraudulent viola-
1
tion’’;
2
(ii) in subparagraph (A) (as so des-
3
ignated), by inserting before ‘‘the domestic
4
value’’ the following: ‘‘three times’’; and
5
(iii) by adding at the end the fol-
6
lowing:
7
‘‘(B) ADDITIONAL
PENALTIES.—A per-
8
son—
9
‘‘(i) that commits a fraudulent viola-
10
tion of subsection (a) shall be prohibited
11
from importing merchandise into the
12
United States during a period of five years
13
beginning on the date of entry of a final
14
judgment with respect to such violation;
15
and
16
‘‘(ii) that is an affiliated person of a
17
person described in clause (i) shall be pro-
18
hibited from importing merchandise into
19
the United States during the period de-
20
scribed in such clause.
21
‘‘(C) AFFILIATED PERSON DEFINED.—In
22
subparagraph (B)(ii), the term ‘affiliated per-
23
son’ has the meaning given that term in section
24
771(33).’’; and
25
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•S 805 IS
(B) in paragraph (2)—
1
(i) by striking ‘‘A grossly negligent
2
violation’’ and inserting the following:
3
‘‘(A) IN
GENERAL.—A grossly negligent
4
violation’’;
5
(ii) by striking ‘‘(A) the lesser of—’’
6
and inserting the following:
7
‘‘(i) the lesser of—’’;
8
(iii) by striking ‘‘(i) the domestic
9
value’’ and inserting the following:
10
‘‘(I) three times the domestic
11
value’’;
12
(iv) by striking ‘‘(ii) four times’’ and
13
inserting the following:
14
‘‘(II) 10 times’’;
15
(v) by striking ‘‘(B) if the violation’’
16
and inserting the following:
17
‘‘(ii) if the violation’’;
18
(vi) in clause (ii) of subparagraph (A)
19
(as so redesignated), by striking ‘‘40 per-
20
cent of’’ and inserting ‘‘three times’’; and
21
(vii) by adding at the end the fol-
22
lowing:
23
‘‘(B) ADDITIONAL
PENALTIES.—A per-
24
son—
25
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•S 805 IS
‘‘(i) that commits a grossly negligent
1
violation of subsection (a) shall be prohib-
2
ited from importing merchandise into the
3
United States during a period of two years
4
beginning on the date of entry of a final
5
judgment with respect to such violation;
6
and
7
‘‘(ii) that is an affiliated person of a
8
person described in clause (i) shall be pro-
9
hibited from importing merchandise into
10
the United States during the period de-
11
scribed in such clause.
12
‘‘(C) AFFILIATED PERSON DEFINED.—In
13
subparagraph (B)(ii), the term ‘affiliated per-
14
son’ has the meaning given that term in section
15
771(33).’’.
16
SEC. 3. PRIVATE ENFORCEMENT ACTION FOR CUSTOMS
17
FRAUD.
18
The Tariff Act of 1930 is amended by inserting after
19
section 592A (19 U.S.C. 1592a) the following:
20
‘‘SEC. 592B. PRIVATE ENFORCEMENT ACTION FOR CUS-
21
TOMS FRAUD.
22
‘‘(a) CIVIL ACTION.—An interested party the busi-
23
ness, property, or other financial interest of which is in-
24
jured by a fraudulent or grossly negligent violation of sec-
25
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•S 805 IS
tion 592(a) may bring a civil action against any person
1
that causes such injury, or any person that aids or abets
2
that person in violating section 592(a), in any United
3
States District Court located in a district in which the in-
4
terested party has suffered injury, without regard to the
5
amount in controversy.
6
‘‘(b) RELIEF.—Upon proof by an interested party in
7
a civil action brought under subsection (a) that the busi-
8
ness, property, or other financial interest of the interested
9
party has been injured by a fraudulent or grossly negligent
10
violation of section 592(a), the interested party shall—
11
‘‘(1)(A) recover compensatory damages equal to
12
the amount of such injury plus an additional penalty
13
equal to three times the amount of compensatory
14
damages; and
15
‘‘(B) be granted such equitable relief as may be
16
appropriate, which may include an injunction
17
against further importation into the United States
18
of the merchandise imported into the United States
19
in violation of section 592(a); and
20
‘‘(2) recover the costs of bringing the civil ac-
21
tion, including reasonable attorney’s fees.
22
‘‘(c) INTERVENTION BY THE UNITED STATES.—
23
‘‘(1) IN GENERAL.—The court shall permit the
24
United States to intervene in an civil action brought
25
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•S 805 IS
under subsection (a), as a matter of right. The
1
United States shall have all the rights of a party.
2
‘‘(2) SHARING OF INFORMATION.—Upon a rea-
3
sonable request by the United States Government,
4
any interested party that brings a civil action under
5
subsection (a) shall provide to the United States
6
Government—
7
‘‘(A) a copy of the complaint;
8
‘‘(B) any memoranda of law or briefing
9
filed with a court in support of the complaint
10
as of the date of the request; and
11
‘‘(C) if the United States Government
12
agrees to reimburse the interested party for all
13
reasonable costs and expenses associated with
14
responding to the request, any information ob-
15
tained by the interested party through discovery
16
processes in the civil action as of the date of
17
the request.
18
‘‘(d) NULLIFICATION
OF
ORDER
IN
NATIONAL
19
EMERGENCIES.—An order by a court under this section
20
is subject to nullification by the President under the au-
21
thority provided by section 203 of the International Emer-
22
gency Economic Powers Act (50 U.S.C. 1702).
23
‘‘(e) INTERESTED PARTY DEFINED.—
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•S 805 IS
‘‘(1) IN GENERAL.—In this section, the term
1
‘interested party’ means—
2
‘‘(A) a manufacturer, producer, or whole-
3
saler in the United States of like merchandise
4
or competing merchandise;
5
‘‘(B) a certified union or recognized union
6
or group of workers that is representative of an
7
industry engaged in the manufacture, produc-
8
tion, or wholesale in the United States of like
9
merchandise or competing merchandise; or
10
‘‘(C) a trade or business association a ma-
11
jority of the members of which manufacture,
12
produce, or wholesale like merchandise or com-
13
peting merchandise in the United States.
14
‘‘(2) COMPETING
MERCHANDISE.—For pur-
15
poses of paragraph (1), the term ‘competing mer-
16
chandise’ means merchandise that competes with or
17
is a substitute for merchandise being imported into
18
the United States in violation of section 592(a).
19
‘‘(3) LIKE
MERCHANDISE.—For purposes of
20
paragraph (1), the term ‘like merchandise’ means
21
merchandise that is like, or in the absence of like,
22
most similar in characteristics and uses with, mer-
23
chandise being imported into the United States in
24
violation of section 592(a).’’.
25
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•S 805 IS
SEC. 4. EXCLUSION OF PERSONS THAT HAVE COMMITTED
1
FRAUDULENT OR GROSSLY NEGLIGENT VIO-
2
LATIONS OF UNITED STATES CUSTOMS LAWS
3
FROM PARTICIPATION IN THE IMPORTER OF
4
RECORD PROGRAM.
5
Section 114 of the Trade Facilitation and Trade En-
6
forcement Act of 2015 (19 U.S.C. 4320) is amended—
7
(1) by redesignating subsections (c) and (d) as
8
subsection (d) and (e), respectively; and
9
(2) by inserting after subsection (b) the fol-
10
lowing:
11
‘‘(c) EXCLUSION.—
12
‘‘(1) IN GENERAL.—The following persons shall
13
be ineligible to participate in the importer of record
14
program:
15
‘‘(A) Any person determined by U.S. Cus-
16
toms and Border Protection or a court of com-
17
petent jurisdiction to have committed a fraudu-
18
lent or grossly negligent violation of section
19
592(a) of the Tariff Act of 1930 (19 U.S.C.
20
1592(a)).
21
‘‘(B) Any person that is an affiliated per-
22
son of a person described in subparagraph (A).
23
‘‘(2) REVOCATION.—The Secretary shall revoke
24
the importer of record number assigned to any per-
25
son under the importer of record program if the Sec-
26
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•S 805 IS
retary subsequently determines that the person is a
1
person described in subparagraph (A) or (B) of
2
paragraph (1).
3
‘‘(3) AFFILIATED PERSON DEFINED.—
4
‘‘(A) IN
GENERAL.—For purposes para-
5
graph (1)(B), the term ‘affiliated person’ has
6
the meaning given that term in section 771(33)
7
of the Tariff Act of 1930 (19 U.S.C. 1677(33)).
8
‘‘(B) DEEMED AFFILIATED PERSONS.—In
9
order to prevent commercial fraud, protect the
10
revenue, and help prevent the use of shell com-
11
panies by importers that seek to evade the cus-
12
toms and trade laws of the United States, a
13
person may be deemed to be an affiliated per-
14
son for purposes of paragraph (1)(B) based
15
upon information declared to U.S. Customs and
16
Border Protection suggesting a formal or ongo-
17
ing relationship between that person and a per-
18
son described in paragraph (1)(A), including
19
similarities in imported merchandise (including
20
article classification upon importation), common
21
declared exporters and shippers, and historical
22
import volumes.’’.
23
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