AMPS TUTORIAL
21 pages
English
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AMPS TUTORIAL

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21 pages
English

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AMPS TUTORIAL
WHAT DO I NEED TO KNOW?

This tutorial is a step by step guide to help you understand your responsibilities
under the new AMPS regime. It's important that all importers/exporters review their
current level of compliance to identify and correct any shortcomings before the
program is implemented later this year (tentative date October 2002). Be prepared
- the clock is ticking.

AMPS - What do I need to know? Tutorial by A&A Contract Customs Brokers Ltd.


Table of Contents:
Why is Compliance Important?.................................................................................3
The Importance of Compliance - (excerpt from CCRA website) ...............................3
What is AMPS? ......................................................................................................4
Purpose of AMPS....4
What It All Means To You ........................................................................................4
Examples Of Contraventions With Penalties................................5
The NPA – Notice Of Penalty Assessment ...................................5
How Do You Respond?......................................................6
The Appeal Process & Time Limits.......................................6
What Do I Need to Do to Ensure Compliance?.............................................................6
Look at your customs-related systems, processes and documentation.......................6
Verify the links ...

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AMPS TUTORIAL
 
WHAT DO I NEED TO KNOW?
  
 
This tutorial is a step by step guide to help y ou understand your responsibilities under the new AMPS regime. It's important that all importers/exporters review their current level of compliance to identify and correct any shortcomings before the program is implemented later this year (tentative date October 2002). Be prepared - the clock is ticking.   
 
AMPS - What do I need to know?   
 
Tutorial by A&A Contract Customs Brokers Ltd.  
Table of Contents: Why is Compliance Important? ................................ ................................ ................. 3  The Importance of Compliance - (excerpt from CCRA website) ............................... 3  What is AMPS? ................................ ................................ ................................ ...... 4  Purpose of AMPS ................................ ................................ ................................ .... 4  What It All Means To You ................................ ................................ ........................ 4  Examples Of Contraventions With Penalties ................................ ................................ 5  The NPA – Notice Of Penalty Assessment ................................ ................................ ... 5  How Do You Respond? ................................ ................................ ...................... 6  The Appeal Process & Time Limits................................ ................................ ....... 6  What Do I Need to Do to Ensure Complia nce? ................................ ............................. 6  Look at your customs - related systems, processes and documentation....................... 6  Verify the links between your customs program and your ac counting systems and procedures ................................ ................................ ................................ ..... 7  Assess your level of compliance ................................ ................................ ......... 7  Develop and implement a Compliance Plan ................................ .......................... 7  What Is An Audit Trail? ................................ ................................ ..................... 8  How To Make Corrections ................................ ................................ .................. 8  Voluntary Disclosure Program ................................ ................................ ............ 8  Your Next Step ................................ ................................ ................................ ...... 8  General Checklist ................................ ................................ ............................ 9  How can A&A Assist Me? ................................ ................................ ....................... 10  Appendix A: Notice of Penalty Assessment Invoice ................................ .................... 11  Appendix B: Canada Customs Invoice – Closer Look and Case Example ........................ 15  Appendix C: NAFTA - Certificate of Origin ................................ ................................ 19   
 
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Tutorial by A&A Contract Customs Brokers Ltd.  
AMPS - What do I need to know?   Why is Compliance Important? In simple terms, this new regime has the potential to impact your firm’s bottom line. The purpose of AMPS is t o ensure compliance with Customs legislation by imposing monetary penalties for even the slightest error with no intent to defraud. Prepare now for this new enforcement procedure that will move away from the transaction- by- transaction reviews into full audits. You can expect dramatic increases in penalty assessments by the CCRA. Keep in mind that Customs auditors are able to go back four years and assess penalties. A repetitive error could turn out to be very costly. Non- compliance could also result in the loss of import privileges or increased targeting for examination and audits.   The Importance of Compliance - (excerpt from CCRA website)  
 
The Minister of National Revenue has made a commitment to the business community that AMPS will ensure that all clients comply with the provisions of the legislation administered by the Canada Customs and Revenue Agency (CCRA) and that non - compliance will be dealt with fairly and expeditiously. Existing penalties are insufficient and the regime relies too heavily on seizure and ascertained forfeiture. The implementation of AMPS will modernize our sanctions regime to make it fair and more effective.  
A number of key industries in Canada operate in a highly competitive global marketplace where the margin between success and failure can be quite small. For these industries, non- compliance with trade requirements by foreign or domestic competitors, and the resulting loss of a level playing field for both Canadian producers and legitimate Canadian importers, can have a s ignificant impact on their bottom line and ultimately on Canada's economy.  
Focusing our resources on these types of threats, and introducing mechanisms that bring about voluntary compliance, will help meet the most demanding expectations of Canadians: that we protect their health- both personal and economic - their safety and security, and the sovereignty of their country. Canadian businesses want assurance that we have effective measures in place to ensure that the integrity of our business practices is not undermined as we seek those efficiencies that are so crucial to maintaining a competitive edge in a global marketplace. AMPS is a key component of our strategy to deliver on this assurance.  
By supporting our compliance strategy with a comprehensive, modern sanctions regime such as AMPS, we will ensure and preserve public trust in the CCRA's ability to protect Canadian business interests.  
The CCRA believes in the fundamental principle of voluntary compliance: most people will obey laws if they understand them, if these laws are reasonable and have intrinsic value to society, and if there are meaningful consequences for failing to comply with these laws. However, there are people who do not comply with the law, whether intentionally or unintentionally. Either way, the actions of these people can have a major impact on the overall health and safety of Canadians, on our economy and ultimately on the success of business in a highly competitive marketplace.  
Compliance is a shared responsibility and more than ever before, it is a sound business investment. We believe that our clients will make this investment once they learn about the
 
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AMPS - What do I need to know?  Tutorial by A&A Contract Customs Brokers Ltd.   benefits that they will derive from our new way of doing business, and the costs of non -compliance. Importers who invest in compli ance and meet the program requirements will benefit from streamlined clearance, accounting and payment processes.   What is AMPS? ·  The Administrative Monetary Penalty System (AMPS) is a civil penalty regime that will secure compliance with Customs legislation through the application of monetary penalties.    ·  AMPS largely replaces the use of seizure and forfeiture provisions for technical infractions. Seizure and ascertained forfeiture will only be used for the most serious offences.    ·  AMPS applies to contra ventions of the Customs Act, the Customs Tariff, and the Special Import Measures Act (SIMA) and the regulations there under, as well as contraventions of the terms and conditions of licensing agreements and undertakings.    ·  AMPS will impose monetary penalt ies in proportion to the type, frequency, and severity of the infraction. Most penalties are graduated and will take the compliance history of the client into consideration.    ·  AMPS penalties are corrective rather than punitive. AMPS will not affect businesses that continue to comply with Customs' requirements and regulations.    ·  From December, 2001, until October, 2002, a transition period will be in effect. This transition phase is intended to serve as an information period. During this period, businesses may become aware of weaknesses in their customs - related systems and processes and take corrective action before AMPS comes into affect.  
 
 Purpose of AMPS The purpose of AMPS is to encourage importers, exporters and service providers to comply with the rules and regulations administered by the CCRA. It is also designed to improve the quality of statistical data collected by the CCRA for the Canadian Government. Canada is legally bound through an international treaty to supply the USA with accurate tra de data. In the past there has been no mechanism in place to enforce the parties to comply. AMPS will ensure the data now received is accurate.  What It All Means To You AMPS will now place the responsibility for total compliance on importers, exporters and transportation companies. It is designed to improve the quality of data by not tolerating errors and omissions that were previously overlooked. This includes revenue neutral errors.  Page: 4  
Tutorial by A&A Contract Customs Brokers Ltd.  
AMPS - What do I need to know?   Importers are responsible to ensure the information they receive fro m their trading partners is correct. Importers must educate their vendors on Customs' reporting and release procedures and documentation requirements. The three main areas to look at are: origin; tariff and valuation. Invalid NAFTA certificates of origi n are one of the largest areas of concern for non- compliance. To claim the duty free status, a valid certificate must be on file. Anything less is unacceptable and subject to penalty assessment. In order to determine accurate tariff classification, a complete description must be shown on the import documentation. In cases where there are gray areas, National Customs Rulings (NCR) are advisable. If cash discounts are being taken, proof will be required in the event of an audit that payment was made within the terms.  The Broker presents a release and accounts for the goods to Customs based on the documentation supplied by the vendor or transportation company. Under AMPS, the Importer is responsible to verify that all information is correct. As the import er, you need to check the supporting documentation received from your Broker to ensure;  1.  The goods on the documentation match the goods received.   2.  The total value of the goods is correct and corresponds to what you paid the vendor.   3.  The HS tariff classification used matches the goods received.   4.  The country of origin declared is correct.   If there are any errors these must be reported to the Broker immediately and amended within 90 days to avoid any penalties. This is critical in the new AMPS regime.  Exporte rs must maintain records pertaining to exportation for a period of six years. Penalties will be accessed for failing to declare prescribed goods on form B- 13 prior to export. Export licences and export permits will also be monitored for possible penaltie s.  In the past, the CCRA had no mechanism in place to enforce compliance with regards to exports. Examples of the degree of these penalties may be viewed under the " Examples of Contravention with Penalties " section.   
 
Examples Of Contraventions With Penalties The link below is the CCRA Master Penalty Schedule Index and background information.  http://www.aacb.co m/amps/pdf/masterpenalty - e.pdf   The NPA – Notice Of Penalty Assessment The below link is a sample of the NPA document. You may also refer to Appendix A for an example of the sample copy of a Penalty Assessment I nvoice.  http:// www.aacb.com/amps/pdf/noticepenassess650.pdf  
 
 
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Tutorial by A&A Contract Customs Brokers Ltd.  
AMPS - What do I need to know?   How Do You Respond? Upon receipt of the NPA, the penalty amount becomes payable. Interest is calculated beginning on the day of receipt and ending on the day of payment. No interest is payable if paid within 30 days.   The Appeal Process & Time Limits A request for correction must be made within 30 days of the NPA or seizure action at the regional or local office. If unsuccessful in trying to resolve, you w ill have 90 days to appeal to the Adjudications Division, Appeals Branch. Extenuating circumstances will allow time limits up to a year. Claimants who are not satisfied with the verdict of adjudications may appeal the decision within 90 days to the Federal Court Trial Division.  Penalty relief agreements can be negotiated in specific situations where the penalty amount may be reduced. This will be considered on a case- by- case basis.   What Do I Need to Do to Ensure Compliance?  
 
·  Look at your customs - related systems, processes and documentation  ·  Verify the links between your customs program and your accounting systems and procedures  ·  Assess your level of compliance  ·  Develop and implement a compliance plan  ·  What is an audit trail  ·  How to make corrections  ·  Voluntary disclosure program  
 Look at your customs - related systems, processes and documentation ·  Have you consulted with your service provider (e.g., broker, accountant, customs consultant, or with the CCRA), to verify that the tariff classification, tariff trea tment, and valuation of the goods you import/export are in accordance with the requirements of the Customs Act, the Customs Tariff, and SIMA?    ·  Can you produce any required customs entry/export documentation and the supporting information from your accounting system pertaining to import/export transactions, including any required certificates of origin, if requested to do so by the CCRA for verification purposes?    
 
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AMPS - What do I need to know?  Tutorial by A&A Contract Customs Brokers Ltd.   ·  Have you ensured that your imported/exported goods comply with the requirements of other agencies (for example, Agrifood)? Have you obtained all necessary licenses or permits?    ·  Are your goods subject to dumping or countervailing duty? If so, do you have procedures to ensure compliance with customs' reporting requirements upon entry?    ·  Is y our carrier aware of the customs' reporting and release procedures and documentation requirements for your trans- border shipments?    Documentation:   Appendix B: Canada Customs Invoice - Closer loo k and case example   Appendix C: NAFTA Form - Closer look and case example  
 
 Verify the links between your customs program and your accounting systems and procedures ·  Are there systems linkages between your customs entry or exportation documentation and your purchasing, receiving, vendors' invoice, and payables processes?    ·  Have these processes been documented to identify any shortcomings?    Assess your level of compliance ·  Have you determined your current level of compliance as well as that of your service providers?    ·  Have you identified any shortcomings in systems or processes that should be addressed?   Develop and implement a Compliance Plan ·  Do you have a plan to address any shortcomings id entified in systems or processes?    ·  Does your plan include a strategy for monitoring compliance on an on - going basis?   
 
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AMPS - What do I need to know?  Tutorial by A&A Contract Customs Brokers Ltd.   What Is An Audit Trail? When the Customs Audit Team decides to visit you, they will go through your internal processes and procedures. A Customs audit will be as rigorous as a tax audit. They don't just look at your customs records but start with the purchase order through the commercial invoice, customs entry, receiving, accounting and payment to the vendor. They will also analyze such issues as royalties, valuation for transfer pricing in related companies, receiving overages and shortages, and how these are reported to Customs.   How To Make Corrections Keep in mind that CCRA now expects corrections to be made whether or not it resul ts in funds being owed or revenue neutral. You are required to amend the Customs Entry within 90 days of having a reason to believe that the Customs Declaration is incorrect. This would cover valuation of the goods, tariff classification, origin status, GST exemption or a diversion to a non- qualifying end user or end use. You are required to make corrections going back four years from the date of the Customs Entry.  Refer to the Customs Memorandum Regarding Self - Adjustments document http:// www.aacb.com/amps/pdf/correctionsd11 - 6- 6- e.pdf   Voluntary Disclosure Program The basis of this program is that it must be voluntary and initiated by the client. A disclosure would not qualify if it were found to have been made with the knowledge of an audit, investigation, or other enforcement action. A disclosure must also involve at least one monetary penalty and involve information one year or more overdue.  Refer to the following documents: Customs Notice N- 332 - Voluntary Disclosures Program http://www.aacb.com /amps/pdf/CNN332.pdf  Customs Voluntary Disclosures Program - Information for Clients http:// www.aacb.com/ amps/pdf/voluntarydisplan.pdf   Your Next Step It is important to perform an internal audit of your import process system. The following checklist can be used as a basic review of this process. Please note that it does not cover all AMPS infractions.  
 
 
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Tutorial by A&A Contract Customs Brokers Ltd.  
AMPS - What do I need to know?     General Checklist  Produce a receiving report to show the total number of cartons and weight received.  Does this match the bill of lading, air waybill etc? Include what was entered into inventory (e.g., total number of items received).  Shortages or overages need to reported and amended.   Confirm the product desc ription, quantities and values on the purchase order to the  vendor with the B3 and supporting documents from the broker. Does the billing invoice from the vendor match?  Was the correct HS Tariff classification used?   Low Value shipments received (Under $1600.00) and no entry received from the  broker. A voluntary entry must be submitted.  Is there a link between purchasing and accounting (e.g., reference numbers, etc.)?   If NAFTA or GPT rates were used on the clearance do you have the valid certificates of  origin on file?   Are permits or licenses required?   Are the goods subject to labeling or marking requirements?   Are the goods subject to dumping or countervailing duty?   Are the goods sub ject to any National Customs Rulings?   Are goods subject to control under OGD's, Other Government Departments (i.e. CFIA,  DFAIT, etc.)?    If any discrepancies are found the broker must be notified to amend the Custo ms entry.  
 
 
This checklist should only be used as a basic review.  
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AMPS - What do I need to know?  Tutorial by A&A Contract Customs Brokers Ltd.   How can A&A Assist Me? For goods entering Canada, whether you act as the importer, exporter or both, it is important that regulatory requirements are completely met as part of your obligatio n. Reviewing everything from the transaction value of your product to the true and accurate completion of your NAFTA Certificate of Origin becomes key to improving your trade management process and being fully compliant under AMPS.  Our team of compliance specialists can take the confusion and uncertainties out of the process - it is what we do. We can work with your company and guide you through the complexities of:  ·  NAFTA compliance   ·  Rules of Origin   ·  Tariff classification   ·  Valuation   ·  Duty/tax recovery   ·  Specific product requirements   ·  Import/Export management  ·  Information management   ·  Development of complete compliance programs and management   Preparing for AMPS means reviewing your export process step by- step. We can work with -you each step of the way to e nsure your company is prepared and fully compliant.  Let us know how we can be of assistance.   
 
 
Thank you for taking the time to review our AMPS tutorial - we hope you found it to be informative. If you have any questions regarding AMPS please feel free t o ask a question on our site at http://www.aacb.com/amps/askquestion.htm .  
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Appendix  
A: Notice of Penalty Assessment Invoice
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