FDA & USDA Dual Jurisdiction: The Most Common Filing Errors in Food & Tech Imports

1. INTRODUCTION

Tariff exposure has become a frontline enforcement priority, not a routine post entry clean up item. In 2025, the Department of Justice elevated trade and customs fraud, including tariff evasion, into its list of high impact white collar priorities. This shift matters because patterns that used to be described internally as isolated mistakes can be reframed as evidence of a deficient compliance system, willful blindness, or a deliberate scheme, especially when errors consistently reduce duty liability.

For importers and brokers, the risk is no longer limited to CBP duty bills or penalty notices. The enforcement environment increasingly links CBP entry data, supply chain documentation, and internal communications to civil fraud theories under the False Claims Act and, where supported by facts, parallel criminal investigations. 

2. REGULATORY OR POLICY CONTEXT

CTPAT was originally focused on physical cargo security. Over time, CBP recognized that modern supply chaThe core legal framework has not changed, but the enforcement posture has.

A. Tariff Act enforcement, civil penalties and prior disclosure

CBP’s primary civil enforcement tool for false statements or omissions in import transactions is 19 U.S.C. 1592, which covers fraud, gross negligence, and negligence in connection with importation. The statute authorizes significant maximum civil penalties, scaled to culpability and duty impact, and it includes a reduced penalty framework for valid prior disclosures.

B. DOJ Trade Fraud Task Force and coordinated enforcement

In August 2025, DOJ announced a cross agency Trade Fraud Task Force with the Department of Homeland Security, describing a coordinated approach that includes Tariff Act duty and penalty actions, False Claims Act actions, and, where appropriate, parallel criminal prosecutions.

C. False Claims Act risk for duty underpayments

DOJ has publicly emphasized the role of the False Claims Act in customs duty matters, including cases framed as avoiding an obligation to pay money owed to the United States. DOJ’s own public materials explain the reverse false claims theory, which is commonly cited in duty evasion cases.

D. Criminal trade fraud statutes, when conduct crosses the line

When facts support a criminal case, DOJ and U.S. Attorney’s Offices have charged conduct under statutes used for customs fraud and smuggling, alongside related conspiracy and financial crimes statutes. Public charging documents and press releases routinely reference 18 U.S.C. 542 and 18 U.S.C. 545 in trade fraud matters.

E. Recordkeeping and audit readiness expectations

Separate from penalty theories, CBP recordkeeping obligations are explicit. Importers and brokers must retain and be able to produce entry related records under 19 CFR Part 163, and CBP’s informed compliance publications emphasize disciplined documentation practices.

3. WHAT CBP OR REGULATORS EXPECT

CBP does not expect CTPAT members to be technology companies. However, it does expect documented, From an audit and enforcement standpoint, regulators expect a defensible compliance system that can demonstrate reasonable care, internal controls, and document integrity. The practical expectations generally include:

• Accurate tariff classification and supporting analysis, including classification rationale, binding rulings where applicable, and change control when products or components change.
• Defensible valuation, including support for assists, tooling, related party considerations, and accurate treatment of additions and deductions consistent with CBP valuation requirements.
• Verifiable country of origin and marking support, including supplier declarations, production records where needed, and escalation procedures when routing or sourcing changes.
• Complete and retrievable entry records for the required retention period under 19 CFR Part 163, organized in a way that supports rapid production during an audit, a CF 28, a CF 29, or an investigation.
• Consistency across commercial invoices, packing lists, purchase orders, product specifications, and entry data, so that “corrections” do not look like after the fact reconstruction.
• A credible process to identify, escalate, and remediate errors, including evaluation of prior disclosure when warranted, and documented corrective actions to prevent recurrence.

DOJ’s stated priority framing makes intent and pattern analysis more central. When the same type of under declaration repeats, the question becomes less about whether one entry had an error, and more about whether the company’s controls were designed and operating to prevent predictable duty loss.

4. COMMON COMPLIANCE GAPS

The following gaps are consistent with issues that CBP and DOJ enforcement actions frequently focus on, because they can produce measurable duty loss and can be tested against records and transactional data. These are presented as compliance risks, not allegations.

A. “Same direction” errors that always reduce duties

Repeated misclassification into lower duty provisions, systematic undervaluation, or recurring origin declarations that avoid additional duties are fact patterns that can be difficult to defend as isolated, especially when the company benefits financially and fails to implement corrective controls after discovery.

B. Weak documentation for valuation decisions

Missing support for assists, royalties, related party pricing, or freight and other deductions creates exposure because valuation is document tested. If the file cannot show how the declared value was derived, the entry becomes vulnerable to duty demands and penalty assertions.

C. Country of origin support that does not match the supply chain reality

Origin claims that rely on informal supplier emails, outdated certificates, or assumptions made before a sourcing change can become acute risks when tariffs differ by origin, or when routing creates a transshipment concern. Regulators will compare entry declarations to production and sourcing records.

D. Over reliance on vendors, forwarders, or brokers without importer controls

A licensed broker files based on information provided, but importer of record compliance responsibilities require governance and review. Lack of importer side controls, including classification governance and document verification, can look like reckless disregard when errors occur repeatedly.

E. Recordkeeping failures and inability to produce complete entry files

If an importer cannot produce entry records promptly and completely, CBP can treat the file as non defensible. Poor retention discipline also weakens the ability to prove reasonable care and can complicate any attempt to resolve issues through a prior disclosure process.

F. Delayed escalation when an internal review finds errors

Once a company identifies a credible duty underpayment issue, slow action can increase exposure. CBP’s framework includes reduced penalties for valid prior disclosures, but that benefit depends on timing and completeness. 

5. HOW S. J. STILE ASSOCIATES HELPS

S. J. Stile Associates supports importers by building defensible compliance routines aligned with CBP expectations and the current DOJ enforcement posture.

• Entry risk reviews focused on the duty drivers that enforcement teams test first, classification, valuation, and origin, with document checklists that map to recordkeeping requirements under 19 CFR Part 163.
• Reasonable care support using CBP informed compliance guidance to structure internal questionnaires, escalation paths, and decision records that can be produced during audits.
• Recordkeeping and audit readiness programs, including file standardization, retention controls, and rapid retrieval design for entry packets.
• Compliance remediation planning when errors are identified, including documentation of corrective actions, governance changes, and evaluation paths that support a conservative resolution strategy consistent with the law.
• Broker filing discipline reinforcement, to ensure commercial documents, PGA data where applicable, and entry declarations remain consistent and traceable from purchase order through entry summary and post entry activity. 

6. FREQUENTLY ASKED QUESTIONS

Q1. What makes an “isolated error” look like fraud to regulators?

Patterns matter. Repeated errors that consistently reduce duty liability, combined with weak controls, missing documents, or ignored red flags, can be interpreted as reckless disregard or intentional misconduct depending on facts. DOJ has publicly identified trade and customs fraud, including tariff evasion, as a high impact enforcement priority, and has emphasized coordinated civil and criminal tools.

Q2. What are the main civil penalty authorities for incorrect import declarations?

A primary authority is 19 U.S.C. 1592, which covers false statements or omissions tied to importation, and sets different maximum penalties for fraud, gross negligence, and negligence.

Q3. How can the False Claims Act apply to customs duties?

DOJ has used the False Claims Act in matters involving underpayment of customs duties, including theories tied to avoiding an obligation to pay money owed to the United States, often described as reverse false claims.

Q4. What records must an importer keep to defend entries?

CBP recordkeeping requirements are detailed in 19 CFR Part 163. In practice, importers should maintain complete entry packets and supporting business records that substantiate classification, valuation, origin, and admissibility, and be able to produce them upon request.

Q5. Does prior disclosure still matter in this environment?

Yes. 19 U.S.C. 1592 provides reduced penalty treatment for valid prior disclosures, but the benefit depends on meeting the legal requirements and acting promptly and completely.

Q6. What should an importer do first if they discover duty underpayments?

Preserve records, scope the issue carefully, stop the root cause from repeating, and evaluate resolution options under the applicable legal framework, including whether a prior disclosure is appropriate. The goal is a defensible, documented remediation process supported by complete entry records. 

7. Final Thoughts

The practical lesson in DOJ’s current posture is straightforward. When duty reducing errors repeat, enforcement authorities may treat them less as isolated and more as indicators of a compliance system failure or a deliberate plan. The best defense is not a slogan, it is a disciplined compliance program that produces contemporaneous documentation, consistent decision logic, and fast corrective action when issues are found.

For importers, preparation means governance over classification, valuation, and origin, plus recordkeeping strong enough to withstand document testing. For brokers, preparation means filing discipline, documentation alignment, and escalation protocols when source documents create risk. In the current environment, compliance readiness is operational risk management.

8. References

DOJ, Departments of Justice and Homeland Security Partnering on Cross Agency Trade Fraud Task Force (Aug. 29, 2025)
https://www.justice.gov/opa/pr/departments-justice-and-homeland-security-partnering-cross-agency-trade-fraud-task-force

DOJ Criminal Division, Memorandum, Prioritization of High Impact Areas Including Trade and Customs Fraud, Including Tariff Evasion (May 12, 2025)
https://www.justice.gov/criminal/media/1400046/dl?inline=

DOJ, Ceratizit USA LLC Agrees to Pay $54.4M to Settle False Claims Act Allegations Relating to Evaded Customs Duties (Dec. 18, 2025)
https://www.justice.gov/opa/pr/ceratizit-usa-llc-agrees-pay-544m-settle-false-claims-act-allegations-relating-evaded-0

19 U.S.C. 1592, Penalties for Fraud, Gross Negligence, and Negligence (U.S. Code, Office of the Law Revision Counsel)
https://uscode.house.gov/view.xhtml?req=(title:19%20section:1592%20edition:prelim)

CBP, Informed Compliance Publication, Reasonable Care (What Every Member of the Trade Community Should Know About)
https://www.cbp.gov/document/publications/reasonable-care

eCFR, 19 CFR Part 163, Recordkeeping
https://www.ecfr.gov/current/title-19/chapter-I/part-163

CBP, Informed Compliance Publication, Recordkeeping
https://www.cbp.gov/sites/default/files/2025-07/Recordkeeping.pdf

CBP, Importing Into the United States, A Guide for Commercial Importers
https://www.cbp.gov/sites/default/files/documents/Importing%20into%20the%20U.S.pdf

DOJ Civil Division, The False Claims Act Primer, Reverse False Claims Section Discussion
https://www.justice.gov/d9/civil/legacy/2011/04/22/C-FRAUDS_FCA_Primer.pdf

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