There were some important developments this week regarding the refund of tariffs imposed under the International Emergency Economic Powers Act.
Following the Supreme Court’s decision overturning the IEEPA tariffs, the Court of International Trade directed U.S. Customs and Border Protection to refund IEEPA tariffs to the importers that paid them. However, Judge Richard Eaton suspended the requirement for CBP to do so immediately while CBP developed and deployed its CAPE system to process refund claims. To date CBP has only rolled out Phase 1 of CAPE, which is limited to certain unliquidated entries and certain entries within 80 days of liquidation, and has not specified when additional phases may be deployed or which additional entries they may cover.
CBP has now been processing IEEPA tariff refund claims for about a month and in a May 26 update listed a number of problems that may cause delays in the processing of these claims.
- Nearly a third of claims have failed the initial file validation, primarily due to (1) importer of record or filer mismatches on CAPE declarations, (2) entry numbers of incorrect length or that do not exist, and (3) .csv files not in alignment with the template published in the ACE portal.
- About 22 percent of entries included on claims that passed the file validations subsequently failed the entry validations, primarily because (1) the entry date is past CBP’s 90-day reliquidation authority, (2) the entry does not contain a HTSUS Chapter 99 number used to assess IEEPA duties, or (3) the entry was already filed on a prior CAPE declaration.
- Thousands of approved refunds have not been transmitted to the Treasury Department for disbursement because Automated Clearing House information account information has not been provided by the importer of record or its authorized CBP Form 4811 designee.
Importers should therefore be careful to ensure their refund claims are accurate and include all required information, and that they are set up to receive electronic refunds, before those claims are submitted.
CBP also noted that about $85 billion in both potential and certified IEEPA tariff refunds have been accepted for processing in CAPE so far and that refunds of about $20.6 billion have been certified by CBP and sent to Treasury for disbursement.
However, Judge Eaton issued May 27 an order indicating concern that CBP is not doing enough to provide refunds to all importers. Eaton said he is “particularly concerned about the millions of informal entries where liquidation was simultaneous, or nearly simultaneous, with the time of entry and for which the liquidation is now final,” noting that so far “CBP has not presented a proposal as to how to address these entries.”
Eaton therefore ordered CBP to show cause why he should not remove the suspended requirement of immediate compliance with the directive to refund IEEPA tariffs. CBP must respond by June 4 and the CIT will hold a hearing on the matter June 9 at which CBP Commissioner Rodney Scott has been directed to appear in person.
The show cause order, or a CIT decision to lift the suspension of immediate compliance, could prompt the Department of Justice to file an appeal of the CIT order directing CBP to refund all IEEPA tariffs, which could impact the refund process. The DOJ has until June 6 to file any such appeal.
In the meantime, STR continues to recommend that importers monitor the dates of liquidation of their affected entries, including those that have been accepted into CAPE, and file timely protests of any such liquidations with CBP. Importers should also timely file protests on entries that have not been filed into CAPE or are not currently eligible for that process.
STR continues to believe there is no immediate need for importers to file their own lawsuits at the CIT to preserve their rights to IEEPA tariff refunds, although (1) a suit may be the only way to recover refunds for finally liquidated entries and (2) there may be other compelling considerations that support a decision to file now (click here for more details).
For more information or assistance, please contact us at messages@strtrade.com or via your usual STR contact.
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