In addition, we included in  group 1 the 173 CFP claims, totaling approximately $28 million, that were  written off during fiscal year 1998, since this was the largest amount  written off from fiscal year 1997 through fiscal year 2000. As of September 30, 2000, Customs reported about 7,180 outstanding  CFP debts that represented about $773.6 million in gross receivables. Cancellation of a CFP Debt. Broker’s Bankruptcy Is the Primary Reason for the Increase in Uncollected Customs CFP Debt

Customs’ gross CFP receivables increased by about $556 million from the  beginning of fiscal year 1997 to the end of fiscal year 2000. During fiscal years 1999 and 2000, Customs assessed numerous  importers a total of about $566 million of CFP relating to the bankruptcy of  the broker and recorded CFP receivables totaling about $484 million for  these 422 claims. Customs records indicated that the remaining $82 million  of assessed amounts was mitigated and thus these amounts were not  recorded as CFP receivables. Opportunities Exist for Strengthening Customs’ CFP Debt Collection Policies and Procedures

Customs can strengthen its CFP debt collection and might improve its  collection efforts by enhancing and better adhering to existing policies and  procedures. OMB further added that it is the role of each agency to  specifically monitor and collect its civil penalty debt regardless of dollar  magnitude and that it is the responsibility of each agency’s office of  inspector general to provide oversight through audit of the agency’s debt  collection activities. Treasury officials stated that they  rely on agencies to determine what debt should be referred to the Financial  Management Service for collection and offset as required by the Debt  Collection Improvement Act of 1996.
Why GAO Did This Study

GAO reviewed the Customs Service's management of and practices for collecting civil fines and penalties (CFP) debt.

What GAO Found

GAO found that Customs' gross CFP debt more than tripled from the start of fiscal year 1997 to the end of fiscal year 2000, rising from $218.1 million as of October 1, 1996, to $773.6 million as of September 20, 2000. During the same period, Customs annually reserved from 75 to 87 percent of its reported CFP receivables in an allowance for uncollectible accounts. The primary reason for the growth in Customs' reported uncollected CFP debt from fiscal year 1997 through fiscal year 2000 was the bankruptcy of a Customs broker in fiscal year 2000. The broker's bankruptcy resulted in Customs assessing 422 claims for $566 million and recording CFP receivables totaling $484 million during fiscal years 1999 and 2000. The remaining $82 million of assessed amounts was eliminated through the CFP mitigation process, and accordingly these amounts were not recorded as receivables. Customs can strengthen some of its CFP debt collection policies and procedures both by enhancing them and better adhering to them. The Office of Management and Budget stated that it had broad oversight responsibility for monitoring and evaluating governmentwide debt collection activities, but that it is the specific responsibility of the agency's office of inspector general to provide oversight through audits of the agency's debt collection activities. In addition, the Financial Management Service (FMS) officials stated that they rely on agencies to determine what debt should be referred to FMS for collection and offset as required by the Debt Collection Improvement Act of 1996, and Customs refers certain delinquent CFP debts to FMS for collection action.