TARIFFS UPDATE: Refund Process Now Underway for Some IEEPA Tariffs

From the SEMA Washington, D.C., office

The U.S. Customs and Border Protection (CBP) has announced Phase 1 of its Consolidated Administration and Processing of Entries (CAPE) process for refunding International Emergency Economic Powers Act (IEEPA) tariffs. 
 

This first phase is narrow in scope: CBP will only accept CAPE declarations for entries that were liquidated within the preceding 80 days to ensure compliance with CBP's 90-day voluntary reliquidation period. 
 

• Through the CAPE Claim Portal, only the importer of record or its authorized broker(s) will be able to submit refund requests by uploading a CSV file listing eligible entries as described below.  Click here to read for information on the CAPE process.

Refund submissions will be subjected to a validation process and once validated, CAPE will remove IEEPA HTS numbers from covered entries, recalculate duties and support liquidation or reliquidation without the IEEPA duties, routing the refunds into CBP's Automated Commercial Environment (ACE) collections module for delivery with potential interest (if applicable). ACE is the United States's centralized digital system for processing imports and exports: cbp.gov/trade/automated.
 

Limited Start for Applying for IEEPA Refunds
 

Phase 1 of the IEEPA refund process only focuses on basic transactions and will not cover all entries on which IEEPA tariffs were paid. CBP will only accept CAPE declarations for entries that were liquidated within the preceding 80 days. The language from CBP suggests that importers will not be permitted to include "finally liquidated" entries in their Phase I refund declarations and will need to wait for a subsequent phase. 
 

In addition, CBP clarified certain other categories of entries that will not be accepted on a CAPE declaration during Phase 1:
 

• Entries flagged for reconciliation and Entry Type 09 – Reconciliation Summary entries
• Entries designated for drawback claims
• Entries covered by a protest
• Entries not filed in ACE and without a liquidation status in ACE
• Entries subject to antidumping and countervailing duties that have liquidation instructions

Following acceptance of a complete, validated CAPE refund declaration, and assuming no complicating issues, CBP still estimates there will be a 60 to 90‑day review period for even the most straightforward transactions. Subsequent phases of refund submissions are in process, but CBP has not released details on the next phases.
 

Preparing CAPE Refund Claims
 

To participate in the CAPE refund process, importers of record and their authorized customs brokers must have an ACE Secure Data Portal account and must ensure that bank account information for refund recipients is up to date in ACE. CAPE refund declarations must be filed in the ACE Portal by the importer or by the broker who originally filed the underlying entries, and refunds will be issued electronically.
 

Because CAPE is designed to handle refund requests in consolidated batches, importers should expect that refunds will not be immediate even once Phase 1 goes live and that CBP will likely prioritize submissions that pass automated validations and do not raise compliance concerns. The staged nature of CAPE means that importers may need to sequence their claims and maintain detailed tracking of which entries are included in each CAPE declaration, especially where multiple brokers or related entities are involved.
 

Compliance Risks When Filing CAPE Refund Claims
 

Each CAPE refund claim will require a certification by the importer that the entry summaries in the CAPE declaration comply with all applicable laws.  Importers, in advance, should identify risks posed by any historically non‑compliant entries before including those entries in a CAPE declaration, particularly where prior disclosures or internal reviews have not yet been completed. Companies with IEEPA-related supply chains may find that CAPE creates both an opportunity to recover material refunds and an obligation to reconcile past compliance gaps.
 

How to Prepare for IEEPA Refunds

Importers who paid IEEPA tariffs should consider the following measures:
 

1. Ensure that they have an account in CBP's ACE system
2. Establish an Automated Clearing House (ACH) link in ACE
3. Conduct a refund analysis and risk assessment.
4. Obtain import records/reports from ACE or your customs broker. Monitor United States imports for which IEEPA tariffs were paid and their liquidation status (e.g., unliquidated, liquidated but not yet final entries, and "finally liquidated" entries) and:
    

• Separate liquidated entries into two groups: (i) liquidated but not "final" entries that are within 80 days after liquidation (i.e., eligible for Phase 1) and (ii) entries more than 80 days past liquidation (which likely will need to be filed during a subsequent phase).
• Stay vigilant to preserve your right to refunds for IEEPA duties. For entries liquidated more than 90 days but less than 180 days, consider filing a protest with CBP. It is not clear, however, how such entries will be treated by subsequent CAPE phases. According to CBP's messaging, entries subject to a protest will not be eligible for Phase 1.
• For finally liquidated entries that are beyond the 180-day protest period, consider filing an appeal with the CIT before the end of the two-year statute of limitations from the date of entry. However, according to the Court's order on March 27, such entries are eligible for refund by CBP and will likely be included in a subsequent phase of CAPE.
   

For more information, contact SEMA Senior Director of Federal Government Affairs Eric Snyder at erics@sema.org.

Image courtesy of Shutterstock | Robert V Schwemmer