U.S. Customs Service

This report focuses on the U.S. Customs Service's efforts to collect the fee for use of harbors and ports--the harbor maintenance fee. Cargo importers, exporters, domestic shippers of cargo between ports in the United States, foreign trade zone users, and passenger vessel operators are to pay the fee on the basis of the value of cargo and passenger fees. Collections from the fee are mainly used to pay the U.S. Army Corps of Engineers to improve and maintain ports and harbors. GAO found that Customs' controls over collecting the fee have not been fully effective and that the data needed for controlling collections are deficient. If these parties do not pay the fee, their nonpayment stands little chance of being detected, and a risk of substantial revenue loss exists. Customs recognizes the benefits of better enforcement of fee collection requirements and has scheduled audits, plans to hire more staff to do matching and auditing, and is looking at improving its systems for detecting and billing nonpayers. According to agency officials, however, these actions are dependent on funding. The law now restricts Customs from using fee revenue to pay for activities associated with collecting the fee. Legislation has been introduced to allow fee revenue to help pay for the costs associated with collecting the fee. GAO supports such a measure.

GAO found that: (1) Customs primarily uses fee collections to pay the Army Corps of Engineers' port and harbor improvement and maintenance costs; (2) since the inception of its collection operation in 1987, Customs has reported HMF collections of about $916 million, with imports accounting for about 67 percent; (3) Customs has incorporated the HMF collection on imports into its existing import process, which also collects import duties and other fees; (4) in fiscal year 1991, importers paid Customs over $17 billion in import duties and fees, including over $258 million in HMF; (5) since exporters, domestic shippers, foreign trade zone users, and passenger vessel operators are not subject to comparable duties and fees that importers pay, except HMF, Customs cannot collect HMF for those users with other collections; (6) although Customs' controls primarily consisted of matching payment data with shipment data and then auditing nonpaying parties, limited HMF collection resources impeded its ability to completely or accurately perform that function; (7) Customs and the Corps estimated that losses resulting from exporters' and domestic shippers' nonpayment of HMF could total about $23 million annually; (8) Customs took such actions to increase collections as identifying nonpaying exporters and increasing its workforce; and (9) although current legislation restricts Customs from using HMF revenue to pay for activities associated with fee collections, legislation has been introduced to change the law to provide money from HMF revenues to assist in paying fee collection costs.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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