WASHINGTON, D.C. — The United States raked in over $160 billion in gross revenue from tariffs imposed under the International Emergency Economic Powers Act (IEEPA) before the U.S. Supreme Court deemed them illegal in February. Given recent headlines about all the tariffs flying around the globe — Section 122, 301, and 338 tariffs — it’s easy to lose sight of where the court-ordered refunds now stand, but Canadian exporters want their roughly $10 billion back.

U.S. Customs and Border Protection (CBP) launched a new Consolidated Administration and Processing of Entries (CAPE) system to handle the refund process, and it has been a few months now since this took effect, so National Post thought now would be a good time to speak with Carrie Owens, a lawyer specializing in international trade from Washington-based firm Kelley Drye — and a former director at U.S. Customs and Border Protection — to learn where things stand with refunds.

How are the refunds going thus far? Are exporters getting their money back?

Carrie Owens: Yes, they are being refunded. CAPE is up and running for the vast majority of entries, including regular consumption entries, and phase two has included warehouse withdrawal entries. Any U.S. importer of record is entitled to file for a refund.

When an order goes into a bonded warehouse, importers don’t pay customs duties until they’re withdrawn from the warehouse and enter the US Customs territory. When that withdrawal entry is filed, one can then get their refund in CAPE.

More recent import transactions are eligible for refunds, but older ones — the finally liquidated entries — are still tied up in liquidation.

I’ve been impressed with how quickly CBP was able to get the system up and running.

What do you mean by liquidation, and what happens after an entry liquidates?

Liquidation is like paying your bill at a restaurant. Where the restaurant says, ‘This is what you owe.’ You say, ‘Great, I’ll pay my bill,’ and then you leave.”

CBP generally sets the import transactions to liquidate by day 314, and that means that’s the final assessment of duties, when they say, ‘This is what we think you owe.’”

Once liquidation occurs, a critical split-timeline starts. For the first 80 days post-liquidation, CBP allows you to claim your tariff refund through their automated CAPE portal. Once you hit day 81, however, the CAPE portal locks you out.

If you disagree with the owed amount, you can then file a protest. The importer has until 180 days after liquidation to file a protest, at which point the entry becomes finally liquidated.

You see a lot of discussion of finally liquidated entries — entries that have gone more than 180 days without a valid protest being filed. That’s where we are in the litigation right now.

Where does the litigation stand?

CBP’s CAPE system is handling the administrative refunds first, including unliquidated entries and recently liquidated entries that still fall within the agency’s processing window. The harder question is what happens to finally liquidated entries, which are no longer eligible for routine CAPE processing and are now at the centre of the government’s appeal to the Federal Circuit.

The litigation now focuses on those finally liquidated entries. The Court of International Trade ordered CBP to refund the duties, but the government says that order cannot automatically extend to every importer; in its view, only the parties before the court are entitled to that relief. In other words, every importer would have to file a lawsuit to get their money back.

The plaintiffs disagree, and the CIT rejected CBP’s narrower reading. The result is an appeal to the Federal Circuit, which is being asked to decide whether the CIT can issue a refund order with broader effect.

Meanwhile, the CIT is still moving forward on related refund cases, including efforts to revive class-action claims that could help similarly situated importers whose entries fall outside CAPE’s refund window.

Does this account for the majority of refunds sought?

No. The Supreme Court issued its decision so quickly, and CBP got the CAPE system up and running quickly… so a lot of the entries were within that first 314 days plus the 80 day period. So they were eligible for the automated CAPE refunds.

How is CBP handling refunds day to day?

They’re doing them in batches. And what you’ll see is that a whole batch will have a liquidation date… That’s part of the CAPE process. That’s actually a good sign.

Once a batch moves, importers should see the money appear into their account probably within about two weeks.

What’s the biggest administrative headache for companies?

The biggest challenge that I’ve seen right now with companies is that they don’t have access to their own ACE portal. This matters because if you have multiple brokers, each broker can only file for a refund for the entries it filed for that importer.

Companies need to make sure they have access to their ACE portal. Then they can file on their own, and it’s fairly straightforward.

If an importer, for some reason, puts entries in there that aren’t qualifying, all that happens is those entries are rejected. All the other entries are accepted.

Have there been delays or any surprises?

Yes, the major complaint I get is people saying that it’s taking a while. CBP is batching them according to how close they are to entering beyond that day 90 after liquidation, when, in the government’s view, they no longer have authority to rule on them, to act on them.

As for surprises, there are some unusual results where taxes that are owed are being subtracted from the refund.

Also, importers need to make sure entries are accurate before filing in CAPE because they won’t be able to file a post summary correction after that. Instead, after the entries liquidate in the CAPE process, importers would have to file a protest within 180 days of liquidation in order to correct errors.

National Post

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