Customs and Border Protection (CBP) is due to unveil its newly developed tool for processing International Emergency Economic Powers Act (IEEPA) tariff refunds on April 20. Dubbed the Consolidated Administration and Processing of Entries (CAPE), it will live within the agency’s import and export processing system, better known as the Automated Commercial Environment (ACE).
Since the Court of International Trade (CIT) ruled that CBP must begin the process of reimbursing importers for the IEEPA tariffs they paid before President Donald Trump’s preeminent tariff strategy was struck down in the Supreme Court, customs has been hustling through the development process for CAPE, promising that the tool would be available by mid-month.
The CIT ruled that all importers—not just those that have filed lawsuits—are eligible for tariff refunds, and CBP must provide them. But Brittney Powell, partner in the international trade practice of Fox Rothschild, said the law firm is advising its clients to take a “belt and suspenders” approach to managing the refund process.
“Since late last year, we’ve been filing complaints at the Court of International Trade. This what is what I would refer to as the belt—essentially bringing a cause of action to challenge the IEEPA tariffs although they’ve been struck down now by the Supreme Court as unlawful,” she explained.
While the CIT ruled that regardless of litigant status, importers that paid the IEEPA tariffs should be refunded, Powell said the process for dispensing refunds is very much still developing. Because there may be certain issues or contingencies that are unique to certain importers or entries, filing a case in the CIT remains a proactive approach they can take to preserve their rights under the Supreme Court ruling, she added.
Meanwhile, “the suspenders approach” entails following the process that CBP is implementing through CAPE when that capability comes online. “We’re advising our clients on the steps they can take in the meantime, while we wait for CBP to issue their final instructions and open the system and get it live,” she said.
One such recommendation from both trade lawyers like Powell and the agency is that importers should make profiles in the ACE portal, which is the platform wherein refunds will be dispersed. While that might seem obvious, Powell said many of her clients rely on their customs brokers to submit their refund requests. “The importer of record typically doesn’t have any insight into like the system that CBP uses to manage entries,” she added.
But these aren’t normal times, and everyone, including customs brokers, are overwhelmed by the sheer volume of refund requests. “We’re hearing that some customs brokers are not willing to do that; it’s just too much for them to handle,” Powell said. As such, “we advise in general [that importers] should set up their own ACE account and authorize CBP to make [Automated Clearing House] deposits into their bank account, so that they can have more control over the process.”
Having an ACE account also gives them visibility into their active entries, giving them the opportunity to run reports and discover which entries have been liquidated. That’s key, Powell said, because liquidation designates the final calculation of duties on imported merchandise, officially closing an entry. It typically occurs automatically around 314 days after an entry is made. The first IEEPA entries began being liquidated in the fall, and liquidation has continued into the spring in spite of the Supreme Court decision.
“Once an entry liquidates, the law allows for an importer to challenge CBP calculation of duties within 180 days of liquidation, and normally a failure to challenge or file a protest within that window bars the importer from challenging the calculation in the future,” Powell explained.
Again, there are extenuating circumstances here, because Trump’s tariffs were deemed illegal. But that hasn’t stopped the liquidation process, and for some importers, that could spell trouble.
“Entries are beginning to liquidate with more frequency because it’s an automatic process which CBP has indicated they don’t have a lot of control over stopping or slowing down in light of the IEEPA decision,” Powell said. As such, she’s advising clients to monitor the liquidation status of their entries closely, to run their own reports on ACE, and to be mindful of running down the clock on the 180-day protest period.
“It may be that, in some cases, to preserve the right to a refund, the importer needs to file a protest to request a refund rather than filing it on the CAPE system. It will depend on the timing and the status of their entries, etc., but that that remains one methodology or opportunity for them to file requests for refunds,” she added. “We mainly want to monitor the timeframe so that the 180-day period does not run out and bar them from seeking recovery.”
There are two other buckets of entries to think about, according to Powell. There are the unliquidated IEEPA entries, for which refund requests should be filed using the CAPE system once it opens up to importers. Then, there are entries that have been liquidated for less than 90 days, which, under the law, CBP has the authority to reliquidate on its own “to correct mistakes, clerical errors or misinterpretations of the law,” the lawyer said.
“CBP normally doesn’t have the authority to voluntarily reliquidate an entry on its own initiative after 90 days from the original liquidation. So there’s a question about how they’ll be able to issue refunds on entries that have been liquidated for more than 90 days,” she said.
Are CIT filings needed, or can those refunds be requested through the CAPE system? “Unless there’s some other clarification from the court on this, as of now, my understanding is that importers will need to file protests for any entries that have liquidated for more than 90 days,” Powell said.
Answers to this aren’t set in stone, though. As can be said for much of the tariff refund process, clarity may only come with time. In the meantime, though, the only remedy for protracted uncertainty may be strapping on the “belt and suspenders.”
