News / Tariff refund system 'in development' – but it will take time, says CBP

Photo: © Danielfela

US Customs and Border Protection (CBP) may be slow-walking the process, but the agency has at least given some indication that it is readying itself to comply with last week’s order from the Court of International Trade (CIT) to begin processing tariff refunds.

That decision had been expected after the US Supreme Court deemed the Trump administration’s use of the International Emergency Economic Powers Act (IEEPA) to impose sweeping tariffs across most of the world illegal.

Despite the expectation, the CBP warned the CIT on Friday it was not yet prepared to begin the process, but in a filing to the court, it said it was confident it could “develop and implement new ACE functionality that will streamline and consolidate refunds and interest payments on an importer basis”.

It added that while it expected development of the ACE system to take 45 days to ready, taking this approach would prove more efficient “than issuing 53 million separate entry-specific refunds, with multiple payments going to the same importer”.

For importers, the process to obtain refunds would require them to first file a declaration in the ACE, listing the entries on which IEEPA duties had been paid, with the system then validating and recalculating applicable duties, minus the IEEPAs and associated interest.

Thereafter, CBP would verify and process refunds “as soon as practicable”, before the ACE liquidated or reliquidated entries to aggregate what each importer was owed – after which, the CBP would certify the refund to be issued electronically by the treasury department.

If it sounds like a truncated process for a legal error by the government, it only gets more complex, with CBP having warned that importers that had yet to complete the set-up process required under February’s CBP rule change may not receive IEEPA refunds.

That framework requires forwarders and shippers to provide far more information, much earlier in the process, including consignee phone numbers and email addresses, plus details of where goods were packed or collected.

 A long list of conditional data elements has also been added, covering everything from shipper contact details and customer account information, to the device IP used when an online order or shipping transaction was created.

“There are 330,566 importers that have paid IEEPA duties. CBP has issued numerous communications, but only 21,423 entities (mostly importers or their brokers) have completed the set-up process to receive their refunds electronically,” CBP said.

“Until importers complete the process to receive refunds electronically, the refunds will be rejected. Since February, CBP has been unable to process 7,700 refunds for 2,897 importers, because those importers had not completed the necessary steps.”

Pete Mento, director of global trade advisory services at Baker Tilly, suggested that the move by the government to slow the process was likely coinciding with the work being done to launch an appeal into the rulings, “and maybe a request for a stay”.

For importers, Mr Mento noted that ,while “refunds are very much on the table, they may eventually be broad”, there was a need to abandon the idea that “CBP is just going to flip a switch and wire billions of dollars back to importers”.

He added: “There will be process. There will be review. And there will almost certainly be a few more rounds of litigation before this is all sorted out.”