Whistleblower Law Tariffs and Customs

Customs agents have many responsibilities, and most of their time and energy is directed towards fighting terrorism, money laundering, and drug trafficking. More often than not, shipments go through the United States’ borders uninspected, leaving the area ripe for fraudulent activities. Whistleblowers are often in a unique position to bring these activities to light, and it is now more important than ever for company insiders to hold their employers accountable.

Employers may break the law by avoiding tariffs and customs. The False Claims Act, also known as the “Lincoln Law” imposes liability on persons and companies that defraud governmental programs. Customs and tariffs fraud falls into this category. A customs duty or tariff is a fee imposed on the import or export of goods in international trade. This practice was originally implemented as an additional stream of revenue for the federal government, and now has evolved to protect American-based companies by giving them a leg up on countries that may have lower manufacturing costs abroad. Whistleblowers who report these crimes are entitled to a reward. Lawsuits brought by whistleblowers under the False Claims Act allow them to receive up to 30% of what the government recovers as a result of the suit.

Types of Tariffs and Customs Law violations

• Misclassification of imported goods. This occurs when a company misrepresents the use of the good they are shipping. Some types of good carry lower tariffs than others, so the company may do this to minimize its expenses. For example, alkaline batteries carry a higher tariff than other batteries. A company may designate its product as non-alkaline to avoid the fee and give it an advantage over companies that pay this tariff.
• Trans-shipping and re-labeling. Here, a company ships a good to an intermediate location and re-labels the good as originally coming out of this country to avoid high tariffs specific to the manufacturing country. For example, anti-dumping laws are country specific. Wooden bedroom furniture coming out of China carry an anti-dumping tariff. A Chinese company may try to avoid this by shipping to an intermediary and re-labeling the package as coming from the intermediary country. Customs departments have been meeting this challenge and establishing new ways to identify businesses that engage in this behavior.
• Failure to identify country of origin. A company may try to avoid a country-specific tariff by failing to identify the country that a good is coming from. This violation carries a 10% tariff, possibly more if the good would have had a higher tariff if labeled properly.
• Undervaluation of goods. This is when a company indicates than the value of is goods is less than it is to avoid fees. Because most duties are dependent on the value of the goods, companies that engage in this often get away with paying far less than they are supposed to.

Not only do these actions defraud the federal government, but they give fraudulent business models a leg up on its honest competitors. It also harms domestic products by eliminating barriers to enter the market from outside the country. If you have evidence of your company’s tariff fraud scheme, we can help. Our attorneys understand that the decision to come forward about fraud within your own workplace is a difficult one. That is why we are here to guide you through every step of the process. At the law firm of Altman & Altman, our group of skillful Whistleblower Lawyers will be by your side every step of the way to help you navigate these difficult waters.

To schedule your free consultation with an experienced whistleblower attorney at Altman & Altman LLP, call 617.492.3000 or contact us through our convenient online chat.