Reconciliation Entry Flag
/ˌrɛkənˌsɪliˈeɪʃən ˈɛntri flæɡ/
The Reconciliation Entry Flag is an indicator set on an entry summary in the Automated Commercial Environment (ACE) to identify data elements, such as value, HTSUS heading 9802 values, classification pending a ruling, protest, or court action, or free trade agreement eligibility, that will be finalized later on a reconciliation entry. It lets importers report information that is not fully ascertainable when the entry summary is filed.
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In Detail
Reconciliation is authorized by 19 U.S.C. § 1484(b), which lets a party elect to reconcile entry elements identified under CBP regulations and requires the reconciliation to be filed within 21 months after the importer declares its intent to reconcile. CBP runs the program as a National Customs Automation Program test under 19 CFR § 101.9(b), now the ACE Reconciliation Prototype (83 FR 2645, effective February 24, 2018). The flag is how the importer declares that intent on each underlying entry summary.
The importer or its broker flags the underlying entry summary (entry types 01, 02, or 06) for the specific issue at the time the entry summary is filed. The flagged entries are later covered by a reconciliation entry, entry type 09, which contains the final information for that issue. Typical scenarios include value elements such as royalties, assists, or final transfer prices that are not fixed at importation, 9802 values for U.S. components, classification questions pending a ruling, protest, or court action, and post-importation FTA preference claims.
A common pitfall is failing to flag the original entry, or flagging it for the wrong issue; an entry that was not flagged cannot be reconciled later. Another is missing the filing deadline: 21 months from the oldest flagged entry summary for value, classification, and 9802 issues, or 12 months from importation for FTA issues, with no extensions. Using the classification flag where no ruling, protest, or court action is actually pending is outside the program's scope.
Classification Significance
Misusing reconciliation, especially for HTS classification, can expose importers to audit risk. Classification reconciliation is limited to issues pending a ruling, protest, or court action, so it is not a vehicle for correcting systemic misclassification. Errors in elements that were knowable at entry remain subject to demands for additional duties and, if they reflect a failure of reasonable care, monetary penalties under 19 U.S.C. § 1592 for negligence or gross negligence.
How Kanon Handles This
Kanon's AI-powered platform delivers a deterministic, legally supported HTS classification at the initial point of decision, significantly reducing the necessity for classification reconciliation post-entry. By providing a comprehensive Classification Support Package that meticulously documents the full GRI traversal and legal reasoning, Kanon empowers importers to make accurate upfront declarations, thereby minimizing reliance on and the compliance risks associated with post-entry adjustments for classification discrepancies.
Frequently Asked Questions
What types of information can be reconciled using the Reconciliation Entry Flag?
CBP's reconciliation program covers four issues: value (for example, royalties, assists, or final prices not known at entry), classification (limited to issues pending a ruling, protest, or court action), HTSUS heading 9802 values, and free trade agreement eligibility.
What is the deadline for filing a reconciliation entry?
For value, classification, and 9802 issues, the reconciliation entry (type 09) is due 21 months from the date of the oldest flagged entry summary. For FTA issues, it is due 12 months from the date of importation of the oldest flagged entry. CBP states that no extensions are allowed.