Knowledge base

How we calculate recon MPF

Purpose

The way we calculate MPF on reconciliation entries is designed to ensure the broker/importer doesn’t underpay OR overpay customs.   However, because of the way Customs wants final reconciliation spreadsheets organized, the MPF calculation seems kind of arbitrary and confusing.   This document describes the steps that we use to calculate recon MPF, so you can confirm that are values truly are correct.

Explanation

General steps

  1. Determine the prorated MPF amount that was filed with customs for each line on every entry on the recon.  This value is already in the system as the ‘before’ MPF value.
  2. Calculate the prorated MPF amount for each entry line on the recon using the post-reconciliation values (see next section for details).
  3. Subtract the “before” MPF value for each line from the “after” value for each line.
  4. Group lines with the same Tariff, Country of Origin, and SPI together.  
  5. Sum the MPF change amounts for all the lines in each group and compare it against the final spreadsheet.

Prorating/calculating MPF for a single line on an entry

Here are the general calculation steps we take for MPF.  These steps are the same whether we’re talking about the ‘before’ or the ‘after’ value.

  1. Eliminate any entry lines that you should not pay MPF on (e.g. because of a special program, etc).  You should ignore these lines for ALL the following calculations.
  2. Calculate the MPF for the line:  
    MPF = MPFRate * LineDeclaredValue
  3. Total the MPF values for all the lines on the entry.  
  4. If the total is GREATER than $485, then we need to prorate the MPF for each line as follows:
    1. Sum up the declared value of all the lines that you should pay MPF on.
    2. For each of these lines, calculate the MPF based on
      LineMPF = 485 X (LineDeclaredValue/SumOfDeclaredValues)
  5. If the total is LESS than the MPF min, then we need to prorate the MPF for each line as follows:
    1. Sum up the declared value of all the lines that you should pay MPF on.
    2. For each of these lines, calculate the MPF based on
      LineMPF = 25 X (LineDeclaredValue/SumOfDeclaredValues)
  6. If the total MPF is between the min/max, then we don’t need to do any additional work. 

Example

Here’s a fictitious example to show you how this works.

Pre-recon values:

Entry #

Line #

Tariff

C/O

SPI

Value

MPF Rate

Line MPF

X04 0191568-4

1

0401.20.40.00

CA

CA

$50,000

0.0000%

$0.00

X04 0191568-4

2

3701.99.30.00

CN

 

$150,000

0.2100%

$315.00

X04 0191568-4

3

3901.20.10.00

CN

 

$250,000

0.2100%

$525.00

X04 0191567-6

1

0401.20.40.00

CN

 

$5,000

0.2100%

$10.50

X04 0191567-6

2

3901.20.10.00

CN

 

$5,000

0.2100%

$10.50

X04 3082353-2

1

3701.99.30.00

CA

CA

$5,000

0.0000%

$0.00

X04 3082353-2

2

0401.20.40.00

CN

$50,000

0.3464%

$173.20

X04 3082353-2

3

3901.20.10.00

CN

 

$5,000

0.3464%

$17.32

We pre-calculated the line MPF for you, but X04 0191568-4 and X04 0191567-6 have to be prorated since they fall into the MPF min/max provisions.  To prorate those entries, we first eliminate any lines that we didn’t pay MPF on and figure out the total of the remaining lines. 

Entry #

Line #

Tariff

C/O

SPI

 

Value

X04 0191568-4

2

3701.99.30.00

CN

 

 

$150,000

X04 0191568-4

3

3901.20.10.00

CN

 

 

$250,000

Total

 

$400,000

 

 

 

 

 

 

 

X04 0191567-6

1

0401.20.40.00

CN

 

 

$5,000

X04 0191567-6

2

3901.20.10.00

CN

 

 

$5,000

 

 

 

Total

 

 

$10,000

 Now we prorate the MPF min/max value for each line and use that instead by calculating:  

Entry #

Line #

Tariff

C/O

SPI

 

Value

Calculation

Prorated MPF

X04 0191568-4

2

3701.99.30.00

CN

 

 

$150,000

$181.33

X04 0191568-4

3

3901.20.10.00

CN

 

 

$250,000

$303.13

 

 

 

 

 

 

 

 

 

X04 0191567-6

1

0401.20.40.00

CN

 

 

$5,000

$12.50

X04 0191567-6

2

3901.20.10.00

CN

 

 

$5,000

$12.50

Post-recon values:

Assume that all of these entries should have been filed with the 0.3464% rate.

Entry #

Line #

Tariff

C/O

SPI

Value

MPF Rate

Line MPF

X04 0191568-4

1

0401.20.40.00

CA

CA

$50,000

0.0000%

$0.00

X04 0191568-4

2

3701.99.30.00

CN

 

$75,000

0.3464%

$259.80

X04 0191568-4

3

3901.20.10.00

CN

 

$50,000

0.3464%

$173.20

X04 0191567-6

1

0401.20.40.00

CN

 

$5,000

0.3464%

$17.32

X04 0191567-6

1

3901.20.10.00

CN

 

$5,000

0.3464%

$17.32

X04 3082353-2

1

3701.99.30.00

CA

CA

$5,000

0.0000%

$0.00

X04 3082353-2

2

0401.20.40.00

CN

$150,000

0.3464%

$519.60

X04 3082353-2

3

3901.20.10.00

CN

 

$5,000

0.3464%

$17.32

 We pre-calculated the line MPF for you, but notice that now only X04 3082353-2 needs to be prorated since it’s the only one that falls under the MPF min/max provisions.  To prorate that entry, we first eliminate any lines that we didn’t pay MPF on and figure out the total of the remaining lines.

Entry #

Line #

Tariff

C/O

SPI

 

Value

X04 3082353-2

2

0401.20.40.00

CN

 

 

$150,000

X04 3082353-2

3

3901.20.10.00

CN

 

 

$5,000

Total

 

$155,000

 Now we prorate the MPF min/max value for each line, and use that instead by calculating:  

Entry #

Line #

Tariff

C/O

SPI

Value

Calculation

Prorated MPF

X04 3082353-2

2

0401.20.40.00

CN

 

$150,000

$469.35

X04 3082353-2

3

3901.20.10.00

CN

 

$5,000

$15.65

Calculating MPF change

First, we match up the before/after MPF values we calculated earlier and subtract the “before” from the “after” value to figure out how much each line’s MPF has changed:

Line/Prorated MPF

Entry #

Line #

Tariff

C/O

SPI

After

Before

Change

X04 0191568-4

1

0401.20.40.00

CA

CA

$0.00

$0.00

$0.00

X04 0191568-4

2

3701.99.30.00

CN

 

$259.80

$181.88

$77.93

X04 0191568-4

3

3901.20.10.00

CN

 

$173.20

$303.13

-$129.93

X04 0191567-6

1

0401.20.40.00

CN

 

$17.32

$12.50

$4.82

X04 0191567-6

2

3901.20.10.00

CN

 

$17.32

$12.50

$4.82

X04 3082353-2

1

3701.99.30.00

CA

CA

$0.00

$0.00

$0.00

X04 3082353-2

2

0401.20.40.00

CN

 

$469.35

$173.20

$296.15

X04 3082353-2

3

3901.20.10.00

CN

 

$15.65

$17.32

-$1.67

 Finally, we group the lines based on the Tariff, Country of Origin, and SPI, and figure out the total MPF change for each group.

Line/Prorated MPF

Entry #

Line #

Tariff

C/O

SPI

After

Before

Change

X04 0191568-4

1

0401.20.40.00

CA

CA

$0.00

$0.00

$0.00

 

 

 

 

 

 

Total:

$0.00

 

 

 

 

 

 

 

 

X04 0191567-6

1

0401.20.40.00

CN

 

$17.32

$12.50

$4.82

X04 3082353-2

2

0401.20.40.00

CN

 

$469.35

$173.20

$296.15

 

 

 

 

 

 

Total:

$300.97

 

 

 

 

 

 

 

 

X04 3082353-2

1

3701.99.30.00

CA

CA

$0.00

$0.00

$0.00

 

 

 

 

 

 

Total:

$0.00

 

 

 

 

 

 

 

 

X04 0191568-4

2

3701.99.30.00

CN

 

$259.80

$181.88

$77.93

 

 

 

 

 

 

Total:

$77.93

 

 

 

 

 

 

 

 

X04 0191568-4

3

3901.20.10.00

CN

 

$173.20

$303.13

-$129.93

X04 0191567-6

2

3901.20.10.00

CN

 

$17.32

$12.50

$4.82

X04 3082353-2

3

3901.20.10.00

CN

 

$15.65

$17.32

-$1.67

Total:

-$126.78

 So overall, it looks like I owe CBP $252 in MPF.

Additional information

  • You cannot calculate MPF accurately for a Tariff/Country/SPI grouping on the final report unless you recalculate the MPF for ALL lines on ALL the underlying entries that are part of that group.
  • The MPF rate changed in 2010.  So, you need to make sure you calculate the “before” MPF rate using the rate that was used when the entry was filed with customs, and calculate the “after” using the rate that the entry should have been filed with.

Difficulty

  • Intermediate - Not too bad but grab a cup of coffee first!

Categories

Applies to

General information

  • Last updated: 4/3/2015

Any feedback is appreciated