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How Are Customs Bonds Calculated?

A customs bond is a versatile surety bond that can provide a number of solutions to different customs challenges. When people ask how to calculate the amount of a customs bond, they are usually talking about a specific and popular type of customs bond, the import bond. The customs import bond guarantees payment to U.S. Customs and Border Protection of all duties, taxes, and fees on imported goods entering U.S. commerce, as well as compliance with all applicable federal regulations. Typically, an import bond amount is calculated based on the duties, taxes, and fees associated with imported goods. There are different ways of determining a customs import bond amount, based on the type of goods being imported and whether the bond is meant for single use (Single Entry Bond) or multiple uses (Continuous Bond).

  • Single Entry Bond
    For one-time transaction bonds, the bond must be equal to the total value of the goods plus all duties, fees, and taxes. Single entry bonds are typically written at a minimum of $100.00, but this can vary.

This type of bond traditionally only makes sense for importers with low annual import volumes and values, and even these importers may consider procuring a Continuous Bond, as this Continuous Bond also covers ISF filing, which is required on ocean shipments.  

  • Continuous Customs Bond
    Continuous customs bonds are generally the more popular choice, as they allow companies to transact imports an unlimited number of times within a 12-month period.

When it comes to calculating a customs bond size for a continuous customs bond for imports, the process is completely different than a single entry bond. Rather than being based on the complete value of the goods, it is instead based on the following:

  1. 12 months of duties paid on import transactions
  2. 12 months of taxes paid on import transactions
  3. 12 months of fees paid on import transactions

The calculation for a Continuous Bond amount is the estimated total duties, taxes, and fees for the next 12 months multiplied by 10%. Round up to the nearest $10,000 to get the total bond amount. The minimum Continuous Bond amount for import bonds is $50,000. For bonds where the duties, taxes, and fees for the 12 month period are in excess of $1,000,000, the bond amounts are rounded up to the nearest $100,000 value.

The chart below provides a simple demonstration of how the estimated duties, taxes, and fees equate to a Continuous Bond amount. Please note that this chart is only to demonstrate the bond amount calculation. Bond amounts may be much higher. The important thing to understand is how to valuate and round up to the correct amount.

 

Total 12 Month Taxes, Duties, and FeesBond Amount
$0 - $499,999$50,000
$500,000 to $599,999$60,000
$600,000 to $699,999$70,000
$700,000 to $799,999$80,000
$800,000 to $899,999$90,000
$900,000 to $999,999$100,000
$1,000,000 to $1,999,999$200,000
$2,000,000 to $2,999,999$300,000

Ultimately, the most important factor in determining bond amount is understanding your business operations. If you only plan to import goods infrequently, you might want to go with a single entry bond. If you anticipate higher volumes of imports, the continuous import bond is the better solution, and determining accurate estimates for the next 12 months of import duties, taxes, and fees is the most important step you can take to make sure you choose a sufficient bond amount.

 

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