Ford faces US court over import tax evasion

FORD Motor Company will pay $US365 million ($A550m) to resolve US government allegations that it violated a federal tariff law by misclassifying and underestimating the value of hundreds of thousands of its Turkish-built Transit Connect vehicles.

As reported by Reuters this week, the US Justice Department said the settlement resolves allegations that Ford devised a scheme to avoid higher duties by willingly applying an incorrect classification on light commercial vans it imported and sold between April 2009 and March 2013.

The US government said the settlement is one of the largest of its kind in recent history.

The Justice Department said Ford imported the vehicles with “sham rear seats and other temporary features to make the vans appear to be passenger vehicles. These temporary rear seats were never intended to be, and never were, used to carry passengers”.

It is alleged that Ford included the seats and other features to avoid paying a 25 per cent duty rate. After customs clearance, the seats were immediately stripped from the vehicles, returning them to their original identity as a two-seat van.

Passenger vehicle imports face only a 2.5 per cent import tax in the United States.

“The government will not permit companies to evade duties by adding sham features to their products and misclassifying them,” US Department of Justice civil division head Brian Boynton told Reuters.

Ford said in 2021 that it could have faced up to $US1.3 billion ($A2b) in penalties over the long-running dispute after the US Supreme Court declined to hear its appeal that it paid increased duties for ‘some’ prior imports.

“Ford strongly disagrees with many of the characterisations in the Department of Justice’s statements and admits no liability in this matter,” said a Ford spokesperson.

“But in the interest of moving on from this complex and decade-old dispute, we have agreed to settle the matter once and for all.”

Ford is now discontinuing sale of the Transit Connect in the United States, leaving the model as a European-only offering.