News / Court orders US Customs to speed up tariff refund process

© Gor Grigoryan

Barely a day passes without new developments in the tariff refund story, but if US Customs (CBP) thinks it can filibuster its way out of paying back duties, the Court of International Trade (CIT) is showing it will push things along.

Commentators are suggesting that access to refunds may not just require the biggest voluntary surrender of data on record, but also result in the companies seeking refunds finding their businesses coming under a microscope.

In an order from the court, Judge Richard Eaton stated CBP had made “satisfactory progress” towards development of a process to action the refund of International Emergency Economic Powers Act (IEEPA) tariffs, but ordered that it must provide a further update by Thursday.

Following the CIT ruling tariffs must be refunded, CBP said it required 45 days to develop its automated commercial environment (ACE) system to streamline refunds. This will require importers seeking refunds to provide a declaration listing entries for which tariffs were paid.

Thereafter, ACE validates and calculates refunds for CBP to verify and process “as soon as practicable”, with ACE liquidating or reliquidating entries to aggregate what each importer is owed. Then CBP certifies the refund to be issued electronically.

Flexport CEO Ryan Petersen told CNBC it would be “very difficult for companies to comply with the rules” surrounding refunds, especially coming on top of February’s CBP rule-change requiring forwarders and shippers to provide far more information, far earlier in the process.

Additional information includes consignee phone numbers and email addresses, and details of where goods were packed or collected, but Mr Petersen said, to date “only 6% of American businesses” had completed the set-up process that would allow them to receive refunds.

He added: “It is very clear education is needed, and hand-holding. And that’s why we built the tariff refunds hub. The idea here is make it dead simple to register for your refund, to calculate how much you’re owed, to claim it.”

According to CBP, there are 330,566 importers that have paid IEEPA duties, but only 21,423 entities (mostly importers or their brokers) have completed the set-up process to receive refunds electronically.

Addressing the more than 300,000 importers yet to complete it, CBP said: “Until importers complete the process to receive refunds electronically, the refunds will be rejected.”

But Pete Mento, director of global trade advisory services at Baker Tilly, suggested importers could open themselves to a far more in-depth assessment by US authorities when they make their refund filing.

On LinkedIn, he said that, with the filing requiring details on brokers used, countries of origin, the duty amounts, entry numbers, HTS classifications, and importers of record, as well as supporting documents, CBP would have the “whole story” of these shipments.

Mr Mento said: “None of this is sinister. It’s just how enforcement works. But the practical effect is that the refund process could also become one of the largest voluntary data submissions CBP has ever received from the importing community.”

When combined with the billions owed in potential refunds, Mr Mento said he would expect to see not only validation of claims but CBP layering reviews of the filings and risk-based audits into the process.

“The real risk is it may function as a compliance microscope. Because, once those entries are submitted, they are no longer just historical filings. They are a curated dataset – the importer has, effectively, raised their hand and said ‘please look at these’.

“If the data is inconsistent, incomplete, or simply wrong, the consequences could extend well beyond a delayed refund. Classification questions. Origin reviews. Valuation scrutiny. Broker filing inconsistencies. All of those issues become easier to identify.”

And Mr Mento warned companies that treated the process “like a quick spreadsheet exercise, may find themselves having a much longer conversation with CBP than they planned”.

Against all of this, the Trump administration is facing demands from Democrat governors to speed up the process, while Massachusetts governor Maura Healey has “demanded” treasury secretary Scott Bessent send “every Massachusetts household” $1,745.

In a letter to Mr Bessent, Ms Healey claimed $4.8bn was owed to Massachusetts’ citizens, noting that it was consumers across the country that had “shouldered the burden of increased costs” , and she called on the administration to “put money back in the pockets of hardworking people”.