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Customs Bonds

A Customs Bond is a financial guarantee required by U.S. Customs and Border Protection (CBP) that ensures payment of all duties, taxes, fees, and potential penalties associated with imported goods. The bond protects the U.S. government if an importer fails to meet their legal obligations.

Customs bonds are mandatory for most commercial imports into the United States. They create a three-party agreement between the principal (importer or customs broker), the surety (insurance company), and the obligee (CBP).

Legal Foundation

Customs bonds are governed by 19 CFR Part 113 and enforced by CBP. The surety company must be approved by the U.S. Department of the Treasury and appear on Treasury Circular 570.

Why Customs Bonds Are Required​

CBP requires customs bonds to ensure financial accountability throughout the import process. The bond guarantees that:

  1. Duties and taxes will be paid — Even if the importer defaults, the surety covers the payment
  2. Compliance obligations will be met — Including timely filing of ISF (Importer Security Filing) and proper entry documentation
  3. Penalties and fines can be collected — If violations occur, CBP can make claims against the bond
  4. Goods will be delivered as declared — For in-bond shipments and warehouse entries

Without a customs bond, CBP will not release commercial merchandise valued over $2,500.

When a Customs Bond Is Required​

Import ScenarioBond Required?Bond Type
Commercial imports ≥ $2,500YesSingle Transaction or Continuous
Commercial imports < $2,500No (generally)—
Personal/informal entriesNo—
Ocean shipments requiring ISF filingYesContinuous (with Activity Code 16) or ISF-specific Single Transaction
In-bond cargo movementsYesContinuous or Single Transaction
Foreign Trade Zone operationsYesContinuous (Activity Code 4)
Customs broker operationsYesContinuous (Activity Code 2)
Warehouse withdrawalsYesWarehouse bond or Importer bond

Key rule: If you import goods commercially into the U.S. valued at $2,500 or more, you must have a customs bond on file before CBP will release your shipment — even if the goods are duty-free.

Types of Customs Bonds​

There are two main types of customs bonds:

1. Single Transaction Bond (STB)​

A Single Transaction Bond covers one specific shipment only. It is purchased separately for each import entry.

Bond amount formula:

Bond Amount = Merchandise Value + Duties + Taxes + Fees

When to use:

  • You import infrequently (1-2 times per year)
  • Your shipment has unusually high value or duties
  • You need a bond quickly for an urgent shipment

Limitations:

  • More expensive per shipment than a continuous bond if you import regularly
  • Does not cover ISF filing for ocean shipments unless you purchase a separate ISF-D (ISF-only) Bond ($50,000 minimum)
  • Administrative burden of purchasing a new bond for each shipment

Typical cost: $50–$200 per shipment, depending on value

2. Continuous Bond​

A Continuous Bond covers all import transactions through all U.S. ports for one year (automatically renewing until canceled). This is the most common type for regular importers.

Bond amount formula:

Bond Amount = 10% of (Annual Duties + Taxes + Fees paid to CBP in prior 12 months)
Minimum: $50,000

Example calculation:

If you paid $400,000 in duties, taxes, and fees last year:

  • Bond requirement: 10% × $400,000 = $40,000
  • Actual bond amount: $50,000 (minimum applies)

If you paid $800,000:

  • Bond requirement: 10% × $800,000 = $80,000
  • Actual bond amount: $80,000

When to use:

  • You import more than 3-4 times per year
  • You ship via ocean and need ISF coverage
  • You want to avoid bond delays for each shipment

Activity codes covered:

Activity CodeDescription
1Basic importation and entry (most common)
16ISF (Importer Security Filing) for ocean shipments

Many continuous bonds combine Activity Codes 1 and 16 to cover both import entries and ISF filings.

Typical cost: $300–$1,000 per year for a $50,000 bond, depending on import history and risk profile

Cost Savings

If you import 4+ times per year, a continuous bond is almost always more cost-effective than buying single transaction bonds.

Other Activity Codes and Specialized Bonds​

Beyond basic import bonds, CBP defines 14 different activity codes for specialized bonding requirements:

CodeTypePurpose
1Basic ImportationGeneral merchandise imports
2Customs BrokerProtects the public from broker errors
3International CarrierEnsures carrier compliance with CBP regulations
4Foreign Trade Zone (FTZ) OperatorSecures FTZ operations
5Cartman/LightermanCovers domestic transport of in-bond cargo
6Wool/Fur Products LabelingEnsures compliance with labeling laws
7Custodian of Bonded MerchandiseSecures bonded warehouses
8Drawback Payment RefundGuarantees return of duties if drawback claim is denied
9Instruments of International TrafficCovers containers/equipment temporarily imported
10Detention of Copyrighted MaterialProtects against counterfeit imports
11Neutral Zone/Public Storage WarehouseSecures warehouse operations
12Grain WarehouseSpecific to grain storage facilities
13Court Costs/LitigationSecures payment of potential legal costs
14Intellectual Property Rights (IPR) OwnerFiled by trademark/copyright owners
16Importer Security Filing (ISF)Ensures timely and accurate ISF filing for ocean shipments

Most importers only need Activity Code 1 (basic importation). If you import via ocean, your bond should also include Activity Code 16 (ISF).

How Customs Bond Amounts Are Calculated​

For Single Transaction Bonds​

The bond amount must equal the full liability of the shipment:

Bond Amount = Entered Value + Estimated Duties + Taxes + Fees

Example:

ComponentAmount
Merchandise value (FOB)$20,000
Estimated duty (5%)$1,000
MPF (Merchandise Processing Fee, 0.3464%)$69
HMF (Harbor Maintenance Fee, 0.125%, if applicable)$25
Total Bond Amount$21,094

CBP typically rounds to the nearest $1,000, so the actual bond might be $22,000.

For Continuous Bonds​

CBP sets continuous bond amounts based on the higher of:

  1. 10% of total duties, taxes, and fees paid in the prior 12 months, rounded to the nearest $10,000
  2. Minimum of $50,000

Calculation examples:

Prior Year Duties/Taxes/Fees10% CalculationRequired Bond Amount
$200,000$20,000$50,000 (minimum)
$600,000$60,000$60,000
$1,200,000$120,000$120,000
$8,500,000$850,000$850,000

CBP may also increase bond requirements if:

  • You have a history of late duty payments
  • You've incurred penalties or liquidated damages
  • Your import volumes are growing rapidly
  • You import high-risk commodities (e.g., antidumping/countervailing duty goods)

Bond Sufficiency and Saturation​

Bond Sufficiency​

CBP periodically reviews whether your continuous bond amount is sufficient to cover your actual import activity. This is called a sufficiency review.

How it's calculated:

Bond Sufficiency = (Current Bond Amount) ÷ (10% of annual duties/taxes/fees)

If your ratio falls below 1.0, your bond is insufficient, and CBP may:

  • Request a bond increase
  • Delay cargo releases
  • Require single transaction bonds for large shipments

Bond Saturation​

Bond saturation occurs when you have multiple shipments in-transit or pending liquidation, and the total potential liability exceeds your bond amount.

Example:

You have a $50,000 continuous bond. You have three shipments:

  • Entry 1: $20,000 potential duty liability (pending liquidation)
  • Entry 2: $18,000 potential duty liability (pending liquidation)
  • Entry 3: $15,000 potential duty liability (newly arrived)

Total exposure: $53,000 → Your bond is saturated

CBP may hold Entry 3 until Entry 1 or 2 is liquidated (finalized), or require you to increase your bond amount.

Saturation calculation example:

You have a $50,000 continuous bond:

  • Entry 1: $18,000 potential liability (pending liquidation, filed 120 days ago)
  • Entry 2: $22,000 potential liability (pending liquidation, filed 60 days ago)
  • Entry 3: $12,000 potential liability (just arrived today)

Total exposure: $52,000 → 104% saturated ⚠️

CBP may hold Entry 3 until Entry 1 liquidates (typically ~314 days after entry, so 194 days remaining).

Bond Saturation Risks

If your bond becomes saturated, CBP can hold your shipments until entries are liquidated (typically 314 days after entry) or until you increase your bond amount. Monitor your open entries closely.

Surety Companies and Treasury Circular 570​

Customs bonds must be underwritten by a surety company approved by the U.S. Department of the Treasury. The official list of approved sureties is published in Treasury Department Circular 570.

What Is a Surety?​

A surety is an insurance or bonding company that guarantees the importer's obligations to CBP. If the importer fails to pay duties or penalties, the surety must pay CBP, then seek reimbursement from the importer.

Sureties assess risk based on:

  • Import history
  • Financial stability
  • Compliance record
  • Commodity types

Treasury Limits​

Each surety has a Treasury limit — the maximum dollar amount of bonds they can underwrite. If you need a very large bond (e.g., $5 million), you may need multiple sureties or a higher-capacity surety.

How to Obtain a Bond​

  1. Through a Customs Broker — Most brokers have surety partners and can arrange bonds quickly
  2. Directly from a Surety — You can contact surety companies directly (Liberty Mutual, Roanoke, Hartford, etc.)
  3. Through a Freight Forwarder — Many forwarders offer bond services
  4. Online Bond Providers — Specialized customs bond companies offer instant online applications

Required information to apply:

  • Your Employer Identification Number (EIN) or SSN (for individuals)
  • IRS Form 5106 (Importer ID Input Record) to obtain your importer number
  • Estimated annual import value and duty payments
  • Commodity descriptions
  • Financial statements (for large bonds or new importers)

Bond Claims and Liquidated Damages​

If you violate customs regulations or fail to pay duties, CBP can issue a claim for liquidated damages against your bond.

Common Reasons for Bond Claims​

ViolationTypical Penalty
Late or missing ISF filingUp to $5,000 per violation
Failure to pay duties within 10 days of liquidationDuties owed + interest
Incorrect value declared (negligence)Up to domestic value of merchandise
Failure to redeliver in-bond cargoValue of merchandise + duties
Violation of intellectual property rightsUp to domestic value of goods

The Claims Process​

Timeline:

  1. Day 0: CBP discovers violation or unpaid duties
  2. Day 1-30: CBP issues Notice of Claim to importer and surety (via CBP Form 5955A)
  3. Day 30-60: Importer may file a Petition for Relief explaining mitigating circumstances
  4. Day 60-180: CBP reviews petition and makes a decision
  5. If claim stands: Surety must pay CBP within 60 days, then pursue the importer for reimbursement
Surety Reimbursement

If your surety pays a claim on your behalf, you are legally obligated to reimburse the surety. Failure to do so can result in:

  • Legal action from the surety
  • Inability to obtain future bonds
  • Personal guarantees being called (for corporate bonds)

Continuous Bond Renewal and Cancellation​

Automatic Renewal​

Continuous bonds automatically renew each year on their anniversary date unless:

  • You request cancellation
  • The surety cancels the bond
  • CBP terminates the bond for compliance issues

You typically pay an annual premium to keep the bond active.

Cancellation​

Either party can cancel a continuous bond with 30 days' written notice to CBP. The bond remains in effect for:

  • All entries made before the cancellation date
  • All liabilities that arose before cancellation (even if discovered later)

Example:

You cancel your bond on March 1, 2026. The bond still covers:

  • An entry from February 15, 2026 that liquidates in November 2026
  • A penalty issued in May 2026 for a January 2026 violation
Before Canceling

Ensure all entries are liquidated and all potential claims are resolved before canceling a bond. You may need your broker or surety to confirm your liability exposure.

Alternatives to Surety Bonds​

In rare cases, importers can use cash deposits or U.S. government obligations in lieu of a surety bond.

Cash Deposit Bond​

  • You deposit cash equal to the bond amount with CBP
  • No interest is paid on your deposit
  • Funds are returned only after all entries are liquidated and no claims exist
  • Not practical for most importers due to capital tie-up

U.S. Government Securities​

  • You can pledge Treasury bonds, notes, or bills
  • Face value must equal the required bond amount
  • Rarely used in practice

Surety bonds are the standard because they require no upfront capital and provide flexibility.

Customs Bonds vs Other Types of Bonds​

Don't confuse customs bonds with other import-related bonds:

Bond TypePurposeWho Requires It
Customs Bond (CBP)Guarantees duties, taxes, complianceU.S. Customs and Border Protection
Freight Forwarder BondProtects shippers from forwarder fraudFederal Maritime Commission (FMC)
NVOCC BondProtects cargo owners from NVOCC financial failureFederal Maritime Commission (FMC)
Carnets (ATA/CITES)Allows temporary duty-free import of goodsInternational Chambers of Commerce

Only customs bonds are required by CBP for standard import clearance.

Best Practices for Managing Customs Bonds​

1. Choose the Right Bond Type​

  • Import 1-3 times/year? → Single Transaction Bonds may be cheaper
  • Import 4+ times/year? → Continuous Bond is more cost-effective
  • Import via ocean? → Ensure your continuous bond includes Activity Code 16 (ISF)

2. Monitor Bond Sufficiency​

  • Review your annual duty payments each quarter
  • Request a bond increase before CBP flags insufficiency
  • Work with your customs broker to track bond saturation on large shipments

3. Keep Bond Documentation​

  • Maintain a copy of your bond (CBP Form 301)
  • Know your bond number and surety company
  • Provide your bond information to your customs broker before the first shipment

4. Pay Duties Promptly​

  • Duties are due within 10 business days of entry summary filing
  • Late payments trigger liquidated damages claims and interest
  • Set up ACH debit with CBP for automatic payments

5. Respond to CBP Notices Immediately​

  • If you receive a Notice of Claim, do not ignore it
  • File a petition if you have a valid defense
  • Missing the 30-day response deadline often means the claim stands in full

6. Maintain Good Records​

  • Keep ISF filings, entry documentation, and invoices for 5 years
  • Organized records help defend against bond claims
  • Use a compliance management system if you import frequently

Resources​

ResourceDescriptionLink
19 CFR Part 113Official CBP bond regulationsecfr.gov
Treasury Circular 570List of approved surety companiesfiscal.treasury.gov
CBP Surety Names and CodesOfficial CBP surety directory with assigned codescbp.gov
CBP Bond Amounts GuideHow CBP sets and reviews bond amounts (February 2024)cbp.gov
19 CFR Part 172Claims for liquidated damages and bond penaltiesecfr.gov