Quiz 16, Question 16

The definition of “records” set out in 19 C.F.R. § 111.1 identifies records as “those documents identified in § 162.1a of this chapter and kept as provided in § 162.1b of this chapter.”

19 C.F.R. § 162.1a(a) provides:
(a) . . . “Records” means:
(1) Statements, declarations, books, papers, correspondence, accounts, technical data, automated record storage devices (e.g., magnetic discs and tapes), computer programs necessary to retrieve information in a usable form, and other documents which:
(i) Pertain to any importation, or to the information contained in the documents required by law or regulation under the Tariff Act of 1930, as amended, in connection with the entry of merchandise;
(ii) Are of the type normally kept in the ordinary course of business; and
(iii) Are sufficiently detailed:
(A) To establish the right to make entry,
(B) To establish the correctness of an entry,
(C) To determine the liability of any person for duties and taxes due, or which may be due, the United States,
(D) To determine the liability of any person for fines, penalties, and forfeitures, and
(E) To determine whether the person has complied with the laws and regulations administered by the Customs Service; and
(2) Any other documents required under laws or regulations administered by the Customs Service.

19 C.F.R. § 162.1b(a) provides,
(a) . . . Any owner, importer, consignee, or their agent who imports, or knowingly causes to be imported, any merchandise into the Customs territory of the United States, shall make and keep records as defined in § 162.1a(a).

19 C.F.R. § 111.21 states, that each broker shall keep current in a correct, orderly, and itemized manner records of account reflecting all his financial transactions as a broker. He shall keep and maintain on file a copy of each entry made by him with all supporting records, except those documents he is required to file with Customs, and copies of all his correspondence and other records relating to his Customs business.

Brokers are thus required to retain accounting records as they pertain to the broker’s financial transactions (answer choice (A)), as well as copies of entries filed for clients (answer choice (B)).

Section 141.46 provides:
Before transacting Customs business in the name of his principal, a customhouse broker is required to obtain a valid power of attorney to do so. He is not required to file the power of attorney with a port director. Customhouse brokers shall retain powers of attorney with their books and papers, and make them available to representatives of the Department of the Treasury. . . .
Since this provision requires brokers to retain powers of attorney authorizing the broker to conduct customs business for clients, answer choice (C) is incorrect.

Section 111.43 requires each licensee to “display its permit in the principal office within the district so it may be seen by anyone transacting business in the office. Photocopies of the permit shall be conspicuously posted in each branch office within the district. Photocopies of the license also may be posted.” Since this provision requires a broker to retain her permit to conduct business, or copy thereof, at her principal office and at all branch offices, answer choice (D) is incorrect.

Having eliminated answer choices (A), (B), (C), and (D), answer choice (E) is the correct answer to question 62. Further, 19 C.F.R. § 111.3(b)(2) requires the broker to file the authorization statement identified in answer (E) with Customs, rather than retain it herself. Additionally, pursuant to 19 C.F.R. § 111.21, documents required to be filed with Customs do not have to be retained by the broker. Therefore, a broker is not required to retain such an authorization at her place of business.

19 C.F.R. § 111.23(a)(1) indicates that the place of retention may be other than the broker’s place of business. Specifically, a broker may keep the records required to be retained by § 111.21 at a centralized storage location upon providing written notice to Customs. See 19 C.F.R. § 111.23(a)(1) (e). Accordingly, the regulations indicate that at least answer choices (A) and (B) (accounting records and entries) are also technically correct responses to question 62 because, pursuant to § 111.23(a)(1) (e), these documents are not necessarily required to be retained by the broker at her place of business.

This question may therefore be an appealable one due to potentially having more than one correct answer.