Customs Test Values: Related-Party Transaction Value, Second Path

Key Points

• Under 19 U.S.C. 1401a(b)(2)(B), a related-party importer may defend transaction value by showing it approximates a previously accepted customs value for identical or similar merchandise sold to unrelated buyers at or about the same time.
• Test values are the second of two paths to defend a related-party price; the first path, circumstances of sale, is far more commonly used and available in practice.
• Test values require a concrete prior CBP acceptance, an identical or similar good, an unrelated buyer, and a comparable time of sale, making all four conditions simultaneously difficult to satisfy.
• When test-value data does not exist or cannot be produced, the importer must fall back on the circumstances-of-sale analysis or risk CBP rejecting transaction value entirely.
• A failed defense at the transaction-value level forces CBP to work through the alternative valuation hierarchy, which often produces a higher dutiable value.

On this page

1. What related-party transaction value acceptance means
2. The two statutory paths: overview
3. Test values under 19 U.S.C. 1401a(b)(2)(B): mechanics and requirements
4. Why test values are rarely available in practice
5. How circumstances of sale dominates instead
6. What happens when neither path succeeds
7. What importers should do
8. Key references

When a U.S. importer buys goods from a related seller, CBP does not automatically reject transaction value, but it does require the importer to affirmatively show that the relationship did not distort the price. Congress built two alternative tests into 19 U.S.C. 1401a(b)(2) to accomplish that. The first is circumstances of sale. The second, and the subject of this guide, is test values: a comparison of the related-party price against a prior CBP-accepted value for identical or similar goods sold to an unrelated buyer. In practice, test values are rarely available, and most related-party valuations live or die on the circumstances-of-sale analysis.

The links in this article go to the primary documents: the statutes, regulations, and official CBP guidance pages themselves. Read the source.

What related-party transaction value acceptance means

Transaction value, defined at 19 U.S.C. 1401a(b), is the price actually paid or payable for imported merchandise when sold for exportation to the United States, adjusted for certain additions. It is the preferred and most frequently used valuation method. For an overview of the broader transaction-value framework, see Customs Transaction Value: The Default Valuation Method Explained.

The statute defines "related party" broadly. Family members, officers or directors who overlap, partners, employers and employees, and entities where one controls or owns five percent or more of the outstanding voting stock of the other are all covered. When any of those relationships exist, CBP has statutory authority to examine whether the relationship influenced the price, because related parties can and do set transfer prices for tax, accounting, or supply-chain reasons that have nothing to do with arm's-length market value.

Critically, the statute does not presume that a related-party price is unacceptable. It presumes acceptance unless CBP has grounds to believe the relationship affected the price. If CBP raises that concern, the burden shifts to the importer to demonstrate acceptability, and the importer has exactly two statutory tools to do so.

The two statutory paths: overview

19 U.S.C. 1401a(b)(2) provides that a related-party transaction value is acceptable if:

• Path 1: Circumstances of sale. An examination of the circumstances of the sale demonstrates that the price was settled in a manner consistent with normal industry pricing practices, or at a level that covers all costs and provides a profit representative of the seller's overall profit over a period of time in sales of the same class or kind of goods.
• Path 2: Test values. The transaction value closely approximates a value previously accepted by CBP as the transaction value, deductive value, or computed value of identical or similar merchandise sold to an unrelated buyer at or about the same time as the related-party importation.

The importer chooses which path to pursue, but must have evidence to support the choice. These are not sequential steps; either one, standing alone, is sufficient to satisfy the statute.

Test values under 19 U.S.C. 1401a(b)(2)(B): mechanics and requirements

The test-value path is codified at 19 U.S.C. 1401a(b)(2)(B). The corresponding implementing regulation appears at 19 C.F.R. part 152. To use test values, the importer must be able to show all of the following:

1. A previously accepted CBP value

The benchmark must be a value CBP has already accepted on a liquidated or otherwise final entry. An estimated or proposed value does not qualify. The acceptance must be documented, typically by reference to a specific entry and its liquidation. A value that is still under protest, subject to a CF 28 or CF 29 inquiry, or otherwise unsettled does not meet this requirement because it has not been "previously accepted."

2. Identical or similar merchandise

The benchmark good must be either identical or similar to the imported merchandise. The statute uses both terms but draws from definitions that parallel those used in the deductive and computed value methods. Identical means same in all respects, including physical characteristics, quality, and commercial reputation, though minor differences in appearance are allowed. Similar means closely resembling, capable of performing the same functions, and commercially interchangeable. Both concepts require the same country of production and, where relevant, the same producer, though CBP has some flexibility on producer identity when identical-producer data is unavailable.

3. Sale to an unrelated buyer

The prior accepted value must have arisen from a transaction between unrelated parties. A previously accepted related-party value cannot be used as a test value because it would create a circular justification. The whole purpose of the test-value path is to anchor the related-party price to an arm's-length market reference.

4. At or about the same time

The prior accepted transaction must be temporally comparable to the import being valued. The statute does not define a precise window, and CBP has applied the concept flexibly based on market conditions. In markets where prices are volatile, a shorter window is required. In stable commodity markets, a longer comparison period may be acceptable. The key question is whether the benchmark price reflects the same market conditions as the related-party import.

What "closely approximates" means

The statute does not require an exact match, only a close approximation. CBP and the courts have not set a bright-line percentage tolerance. In practice, the closer the numbers, the stronger the defense. An importer relying on a benchmark that is materially lower than the related-party price should be prepared to explain the difference. Adjustments for level of trade, quantity, and transportation costs may be appropriate to make the comparison meaningful.

Why test values are rarely available in practice

Each of the four requirements above is individually demanding. Satisfying all four simultaneously, for the specific goods at issue, is genuinely difficult. Several structural reasons explain why test values are uncommon:

Related-party structures dominate supply chains

Many importers who source from related parties do so exclusively through that relationship. Their product lines may be manufactured only by the affiliated supplier, making identical or similar unrelated-party sales simply nonexistent at the relevant time. There is no benchmark to find.

Prior accepted values are not publicly searchable

CBP does not maintain a publicly accessible database of liquidated entry values broken down by product and buyer relationship. An importer seeking test values typically must rely on its own prior entries involving unrelated buyers, or on industry data, neither of which may be available or documented in the form CBP requires. Without a specific liquidated entry number to cite, the "previously accepted" requirement is very difficult to satisfy.

Product specificity creates matching problems

Even when comparable sales exist in the market, the identical-or-similar standard requires a careful product-by-product match. Branded goods, proprietary components, and highly specified industrial parts are often unique to the related-party relationship. Small differences in specification or packaging can defeat a similarity argument.

Timing mismatches

Even when an importer finds a prior accepted value for an identical or similar product, that value may be from a period when market conditions, exchange rates, or input costs were meaningfully different. Defending the temporal comparability adds another evidentiary burden.

How circumstances of sale dominates instead

Because test values are so rarely available, the overwhelming majority of related-party valuation defenses are built on the circumstances-of-sale path. That path does not require a prior accepted value at all. It requires evidence that the price was set consistently with industry norms or that it covers costs plus a representative profit. That evidence can come from transfer-pricing studies, industry pricing surveys, audited financial statements, cost buildup analyses, and profit benchmarking. These are documents that a well-prepared importer typically has or can commission.

For a detailed treatment of how to build and document a circumstances-of-sale defense, see Circumstances of Sale Test: Proving Related-Party Prices. For the broader framework of how CBP evaluates related-party relationships at importation, see Related Party Customs Valuation: The Acceptance Framework.

The practical consequence is that most importers never need to engage with the test-value path at all. Legal and compliance teams should still understand it, however, for two reasons. First, a CBP import specialist or trade audit team may ask whether the importer has explored test values. Being able to explain why they are unavailable is part of a complete defense. Second, in the unusual case where test-value data does exist, it can be a faster and cleaner path than a full circumstances-of-sale analysis.

What happens when neither path succeeds

If CBP determines that the related-party transaction value is not acceptable and the importer cannot satisfy either path, CBP cannot use transaction value for that importation. It must then proceed through the alternative valuation hierarchy in the order specified by statute:

1. Transaction value of identical merchandise
2. Transaction value of similar merchandise
3. Deductive value
4. Computed value
5. The "fallback" method, based on reasonable means consistent with the statute's principles

Each step down the hierarchy typically produces less predictable and often higher dutiable values, increasing duty liability. In a post-entry audit or focused assessment context, a CBP finding that transaction value was improperly claimed on related-party entries can result in duty demands covering multiple years of importations, plus interest. Maintaining strong contemporaneous documentation for each entry is essential. See Post Entry Audit Program: Build a Monthly Self-Review That Catches Errors for practical steps to identify valuation problems before CBP does.

What importers should do

• Audit your related-party relationships at entry. For every import from a related party, confirm that a documented valuation defense exists before the entry is filed. Do not wait for a CBP inquiry to begin the analysis.
• Assess test-value availability early, then move to circumstances of sale. Check whether prior liquidated entries for identical or similar goods sold to unrelated buyers exist and are documented. If they do not exist or the match is imperfect, build the circumstances-of-sale file, which typically means a cost-and-profit analysis or a transfer-pricing study aligned to customs standards.
• Keep contemporaneous records by entry. CBP expects the valuation defense to exist at the time of importation, not reconstructed years later. Retain intercompany agreements, cost buildup worksheets, and any benchmark data in entry-level files.
• Train your customs broker team on the distinction between the two paths. The choice of path and the supporting documentation required differ significantly. See Customs Broker Oversight as an Importer Duty: What You Must Do for the importer's responsibility to ensure its broker has the information it needs.

Key references

• 19 U.S.C. 1401a: The customs valuation statute, including the related-party acceptance framework at subsection (b)(2) and test values at (b)(2)(B).
• 19 C.F.R. Part 152: CBP's implementing regulations for customs valuation, including related-party procedures.
• CBP Customs Valuation: CBP's official valuation guidance page, including rulings and informed compliance publications.
• CBP Informed Compliance Publication: Customs Valuation: Detailed agency explanation of each valuation method and the related-party rules.
• Circumstances of Sale Test: Proving Related-Party Prices: CustomsGenius guide on the first and more commonly used path to related-party acceptance.
• Related Party Customs Valuation: The Acceptance Framework: CustomsGenius guide on how CBP evaluates the overall related-party transaction-value question.