# Prior disclosure: how to fix a duty underpayment before CBP finds it | TariffTrack HQ

Source: https://tarifftrackhq.com/blog/prior-disclosure-duty-underpayment-cbp-2026-10-07/

**Short answer:** Prior disclosure is CBP's voluntary program for importers who discover they underpaid duties or violated trade rules on past entries. Disclose before CBP starts an investigation, pay the lost duties plus interest, and penalties are capped at the interest amount rather than multiples of the duty loss. It is the cheapest way to fix a compliance failure, and the window closes the moment CBP comes knocking first.

## What prior disclosure covers

The program covers violations of 19 USC 1592: negligence, gross negligence, or fraud in connection with import transactions. The classic triggers are misclassified products, wrong country of origin, undeclared assists or packing costs, and related-party pricing that was never adjusted. If the error reduced the duties you paid, it likely qualifies.

Disclosure does not cover everything. It cannot be used once CBP has commenced a formal investigation of the issue, and it does not protect against criminal referral in fraud cases, though it significantly improves the civil outcome. The key legal line is timing: disclosure must precede CBP's knowledge, not just CBP's formal action.

## The race against CBP's knowledge

This is the part importers misunderstand. The protection depends on disclosing before CBP knows about the violation, and CBP's knowledge can come from many directions: a competitor's tip, a whistleblower, data from a partner agency, or an audit that has quietly begun. You do not get a notification when the window closes.

The practical rule is speed. When an internal review surfaces a potential violation, the disclosure clock starts that day, not when the review is complete. File the initial disclosure promptly to lock in the protection, even if the full calculation of lost duties takes longer. The regulations allow the initial filing to precede the tender of duties.

## How the process actually works

The disclosure is filed with the Fines, Penalties and Forfeitures office at the port, describing the violation, the entries affected, and the estimated loss of duties. CBP reviews, may ask for more information, and ultimately calculates the lost duties and interest. The importer tenders that amount, and penalties are limited to the interest on the lost duties for negligence and gross negligence.

For fraud, the math is harsher but still far better than getting caught: penalties are capped at a multiple of the loss rather than the much larger multiples available when CBP discovers the violation itself. Either way, the voluntary path costs a fraction of the involuntary one. The process typically takes months, not weeks, so patience is part of the strategy.

## Building the internal case first

Before filing, quantify the exposure properly. That means identifying every affected entry, recalculating the correct duty, and documenting how the error happened. The documentation matters because CBP distinguishes the careless from the willful, and your own records are the evidence of which one you were.

This is also when you fix the root cause. A disclosure that describes a classification error while the company keeps classifying the same way invites the obvious question. Change the process, retrain the people, document the correction, and include it in the disclosure. CBP treats remediation as evidence of good faith, and good faith is the currency of the whole program.

## When not to disclose, and what to do instead

Do not disclose what is not a violation. A reasonable care disagreement over a genuinely ambiguous classification is not negligence, and disclosing it can create liability where none existed. Get trade counsel's assessment before filing: the question is not whether the entry was perfect, but whether it violated the statute.

If CBP has already started asking questions about the issue, the prior disclosure window is likely closed, but the situation is not hopeless. Cooperation, prompt payment of duties owed, and demonstrated remediation still mitigate penalties substantially. The lesson is the same in every scenario: the cheapest time to fix a duty error is the moment you find it.

## Can I file a prior disclosure through my customs broker?

A broker can help prepare it, but given the legal stakes, trade counsel should review or lead the filing. The disclosure's wording affects penalty exposure.

## Does prior disclosure trigger a full CBP audit?

It can lead to CBP examining the disclosed issue closely, but a well-prepared disclosure with full remediation typically narrows rather than expands scrutiny.