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Since the Supreme Court invalidated the tariffs imposed under the International Emergency Economic Powers Act (IEEPA) on February 20, the U.S. Court of International Trade (CIT) has been engaging on a weekly basis with Customs and Border Protection (CBP) to expedite refunds. In early March, CBP shared its plans for an expedited and simplified tariff refund system over the past week. The U.S. Chamber welcomed the initial CBP proposal, and the agency indicated it will be able to launch the system within 45 days (by about April 20).
Big Numbers: More than 330,000 companies paid a total of approximately $166 billion in IEEPA duties that must be refunded. The system proposed by CBP will refund these duties to importers through CBP’s Automated Commercial Environment (ACE) system, which is well known to importers. CBP told the CIT on March 6 that it “is confident that it can develop and implement new ACE functionality that will streamline and consolidate refunds and interest payments on an importer basis, rather than issuing 53,173,939 separate entry-specific refunds with multiple payments going to the same importer.”
CAPE of Good Hope: In a declaration filed with CIT, CBP explained that it is developing the Consolidated Administration and Processing of Entries (CAPE) system to refund duties imposed under IEEPA. This new ACE functionality will have four integrated components:
- The Claim Portal will allow importers and brokers to submit refund requests to CBP via a web-based interface for processing and validation. Filers will be able to upload spreadsheets of entries for which they are requesting IEEPA refunds in a standard format.
- The Mass Processing component will remove IEEPA tariff codes and recalculate duties as if those tariffs were never applied. After this, the system accepts the CAPE Declaration.
- The Review and Liquidation/Reliquidation component will review entries identified in the accepted CAPE Declaration. It will update the entry summaries to reflect the new total duties paid and will automatically calculate interest, schedule liquidations, and direct manual reviews where needed.
- The Refund component will consolidate and process refunds electronically to designated accounts as established in the CAPE Declaration.
As of the end of March, most but not all elements have been constructed and are in testing.
Interest Where Due: U.S. law requires payment of interest, which is accrued from the date the importer of record deposits estimated duties until the date of liquidation or reliquidation, for the invalidated tariffs. The interest rate is 6% at present. CIT has noted that “interest is accumulating every day, with approximately $650 million accruing per month,” a fact that hopefully will incentivize expeditious refunds.
Refunds for All Entries: A large majority of IEEPA-tariffed entries have not been liquidated, and issuance of refunds for these should be relatively simple. CIT on March 27 broadened its IEEPA tariff refund order to include finally liquidated entries. On March 27, CIT’s Judge Richard Eaton said “[a]ny liquidated entries for which liquidation is final shall be reliquidated without regard to the IEEPA duties.” This expanded order removes an ambiguity in CBP’s plans that had persisted previously.
One Thing to Do Now: One essential and practical step importers should do now in anticipation of tariff refunds is sign up for Automated Clearinghouse (ACH) Refund, which reportedly only 10% or so of affected firms have done. CBP requires ACH enrollment to receive duty refunds electronically. After enrolling for ACH refunds, any refund you receive will automatically be deposited directly into your bank account. Companies may wish to consult with their customs broker or trade counsel.
Source: www.uschamber.com.
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