HICKSVILLE, N.Y.—The World Floor Covering Association ( WFCA) has issued an alert regarding the recent investigations into wood flooring imports since 2003 due to a change in tariff classifications.

According to the alert, U.S. Customs and Border Protection has proposed large penalties on wood flooring shipments that were imported in the past five years and declared duty-free. WFCA advises concerned importers to review their records and reveal any unpaid duties now before Customs acts, as large penalties can be avoided.

Penalties vary dependant upon the quantity and value of the import shipments, but if your company imported “duty-free” wood flooring products since February 2003—even if it later switched to paying import tariffs—Customs may still penalize you for declaring the products duty-free.

The agency has already suggested penalties ranging from $500,000 to close to $2 million on shipments made between 2003 and 2006. This is on top of the duty and interest costs.

However, U.S. law offers a tool for importers to protect themselves from such penalties—a disclosure. A company may file a disclosure alerting Customs to the past financial errors only prior to an investigation. In this case, the importer must still pay the duties owed plus interest, but receives legal protection from any additional penalty assessment.

WFCA advises all importers to review entries and consult with their legal departments about filing a disclosure as soon as possible to avoid significant penalties.

For further information, contact Greg McCue and Mike Gershberg, attorneys in the international trade and customs practice, at Steptoe & Johnson by calling 202.429.3000 or gmccue@step toe.com and mgershbe@steptoe.com.