First Sale Valuation Under Fire: CBP’s 2026 Questionnaire Campaign and the Last Sale Valuation Act

Two pressures are bearing down on first sale valuation at once, and they are landing on the same importers. CBP has begun sending questionnaires to companies that claimed first sale on entries between 2023 and 2025, asking them to prove those claims held up. Meanwhile, a proposed bill in the Senate would scrap first sale as a valuation method altogether. One threat is operational and already in your inbox; the other is legislative and still forming. If your duty strategy leans on first sale, you may now have to defend it on two fronts, and documentation that worked when nobody was looking may not survive a campaign built to find gaps.

What First Sale Valuation Is and Why Importers Use It

First sale valuation lets you declare customs value based on an earlier sale in a multi-tiered transaction, typically the factory-to-middleman price, rather than the higher price the middleman charges you. Because duties are assessed on declared value, a lower lawful value means a lower duty bill. The method has been available under US law for decades, and it has grown more attractive as tariff rates have climbed.

The three CBP requirements

To use first sale, you have to satisfy three conditions, all rooted in the Nissho Iwai line of decisions. First, a bona fide sale between the manufacturer and the middleman, meaning a real transfer of title and risk for consideration. Second, arm's-length pricing, set as it would be between unrelated parties. Third, goods clearly destined for the United States at the time of that first sale. If you miss any of these, the claim collapses back to the higher transaction value.

Typical duty savings

Savings depend on the markup between tiers, but importers can see customs value drop enough to cut duty liability by 10 to 30 percent on multi-tier supply chains. On a high-volume program at elevated rates, that compounds across a year, which is why the method draws scrutiny when rates are high.

Industries that rely on first sale most heavily

First sale shows up most in sectors with long sourcing chains and meaningful middleman markups: apparel, footwear, electronics, and furniture. These categories also carry steep duty exposure right now, so the incentive to claim first sale and the incentive for CBP to test those claims point in the same direction. 

CBP’s 2026 First Sale Questionnaire Campaign

Why CBP is targeting 2023-2025 claimants

As tariffs rose across 2023 to 2025, first sale claims rose with them, and a method that lowers declared value during a high-rate period is a natural place for CBP to look for revenue. The agency is working through entries from that stretch, focusing on importers whose first sale volume grew alongside the rate increases.

What the questionnaire actually asks

The questionnaire asks you to prove all three requirements on specific entries:

• The purchase contracts and commercial invoices between manufacturer and middleman

• Proof of payment along that leg

• Evidence the pricing was arm’s length

• Documentation that the goods were US-destined at first sale (such as purchase orders, shipping instructions, and labeling)

The 30-day response window, and consequences of missing it

Once a questionnaire arrives, the response window is short, generally 30 days. If you miss it, or answer with incomplete records, CBP can disallow the first sale treatment and reassess duties at the higher transaction value, often with interest and possible penalties. The quick response window can catch teams off guard, because assembling years-old records across a manufacturer, a middleman, and your own systems takes longer than a month from a standing start.

The Cassidy Last-Sale Valuation Act

The Last Sale Valuation Act, associated with Senator Bill Cassidy, would change the default rule for appraising imported goods. Rather than allowing valuation to be based on an earlier sale in the chain, it would require customs value to be based on the last sale before importation, the price the US buyer pays. 

Senate status and political timeline

As of mid-2026 the bill is pending in the Senate and has not been enacted. Where it sits in committee, and whether it attaches to a larger trade or revenue vehicle, are still open questions.

Industry opposition and lobbying

Importers and trade associations in the sectors that rely on first sale, apparel and footwear groups among them, have lined up against the change, calling it a broad duty increase by another name. The opposition is organized and the bill is contested, which is part of why first sale remains usable today even as its future stays uncertain.

Pressure-Testing Your First Sale Program

The questionnaire campaign is a reason to audit your own program before CBP does. Run each active first sale relationship against the three requirements and find where the proof is thin.

Documenting the bona fide sale

Pull the contracts, commercial invoices, and payment records for the manufacturer-to-middleman leg. You are demonstrating a genuine transfer of title and risk, so the documents should show real consideration and terms consistent with a true sale.

Defending arm’s-length pricing

Show that the first sale pricing reflects market terms. For related-party transactions, that usually means transfer pricing documentation and comparable transactions you can point to. If your only support is an internal pricing policy, that gap might be worth closing now.

Proving US-destination at first sale

The goods have to be clearly bound for the US when the first sale occurs. Routing records, shipping instructions, US-specific labeling or packaging, and terms of sale all help establish that the destination was fixed early in the chain.

Building a Defensible Questionnaire Response

Document inventory before you respond

Before you write anything back to CBP, inventory what you have against what the questionnaire asks, entry by entry. Knowing the condition of your historical data ahead of time changes the outcome. 

Coordinating internal counsel, customs broker, and tax

A strong response is rarely one person's job. Your customs broker knows the entries, internal counsel manages legal exposure, and tax owns the transfer pricing story behind your arm's-length support. Align them early so the response speaks with one voice.

When to bring in a customs attorney

Bring in outside customs counsel when the dollar amounts are large, when penalties are on the table, or when CBP signals the questionnaire is part of a broader review. Doing it early keeps a routine information request from turning into an enforcement action.

Alternatives If First Sale Becomes Untenable

If the Last Sale Valuation Act passes, or your program can't clear the three requirements, you have options, though none come free.

Computed value method

Computed value builds customs value from the cost of materials, fabrication, profit, and general expenses rather than a sale price. It can be defensible where you have deep visibility into a manufacturer's cost structure, but it demands cooperation and data many suppliers are reluctant to share.

Restructuring middlemen out of the supply chain

Some importers buy directly from the manufacturer and remove the middle tier, leaving one sale to appraise. That carries real commercial tradeoffs in sourcing, financing, and logistics, so it is a supply chain decision as much as a customs one.

Reclassification and country-of-origin shift combinations

Where it is legitimate, revisiting classification or reconfiguring where substantial transformation occurs can change duty exposure independent of valuation. These moves have to rest on the actual facts of your product and process, and getting classification wrong creates its own liability, so use them carefully.

FAQs

What's the typical duty savings from first sale valuation? Commonly 10 to 30 percent of duty liability on multi-tier supply chains, though the actual figure depends on the markup between the first sale and the price the US importer pays.

If I get a CBP questionnaire, do I have to respond? Yes. A questionnaire is a formal request, and failing to respond within the window lets CBP disallow your first sale treatment and reassess duties at the higher value. Treat it as a hard deadline.

Does the Last Sale Valuation Act apply retroactively? The bill is still pending and its final text could change, so confirm the current version before relying on any answer. Separately, CBP's questionnaire campaign already reaches back to 2023-2025 entries [VERIFY] under existing law, independent of the bill.

Can I keep using first sale while the bill is pending? First sale remains a lawful valuation method unless and until the law changes, so a properly documented program is usable today. The live concern is the active questionnaire campaign.

Can my customs broker handle the questionnaire alone? A broker can lead the response and knows your entries, but a strong defense usually pulls in internal counsel and tax for the legal and transfer pricing pieces, and outside customs counsel when the exposure is significant.