Action Required: Set Up ACE & Activate ACH for Refunds
We are sharing updated information from Roll & Harris LLP regarding the latest developments on IEEPA tariffs refunds.
To ensure you are receiving refunds, please set up your ACE account and activate ACH refunds as soon as possible.
IEEPA Tariffs Refunds – Importers Win Round 1 Today, but Fight is Not Over
In what can only be described as a near complete win for importers, today, Judge Richard Eaton of the U.S. Court of International Trade (CIT) ORDERED U.S. Customs & Border Protection (CBP) to refund all IEEPA tariffs that were paid on UNLIQUIDATED entries and on entries for which LIQUIDATION IS NOT FINAL.
Judge Eaton noted that the government will have to pay interest on those refunds. For those wishing to listen to the audio of today’s hearing, it is available here.
With regard to the entries where LIQUIDATION IS FINAL, the CIT set a closed (not public) conference for this Friday. Judge Eaton identified NOT FINALLY LIQUIDATED entries as those where liquidation happened less than 90 days ago since CBP, per 19 USC 1501, has 90 days from liquidation to voluntarily reliquidate an entry.
If the CIT’s order stands – which remains to be seen – and if CBP complies – which also remains to be seen – CBP will have to liquidate every importer’s UNLIQUIDATED entries, as well as every importer’s entries where liquidation is NOT FINAL (liquidated less than 90 days ago), with refunds of the IEEPA tariffs. We note that is not a 100% complete refund of every IEEPA tariff as FINALLY LIQUIDATED entries are not covered by today’s entries, but for most importers, it should result in the refund of the majority of the IEEPA tariffs paid.
In an ideal world, the above means that refunds would start flowing to importers as soon as 2 to 3 weeks from now since refunds usually follow liquidations and reliquidations about 2 to 3 weeks after the liquidation/reliquidation. That is, in an ideal world, CBP would comply with the CIT’s order and begin, as early as this Friday (most regular liquidations occur on Fridays), to liquidate currently unliquidated entries without regard to IEEPA tariffs (i.e., refunds). Same for entries that liquidated within the last 90 days.
It is far from clear that we live in the ideal world. The best evidence of this is that toward the end of today’s hearing, the government verbally asked for a stay of Judge Eaton’s order so as to allow the government to immediately appeal. Judge Eaton summarily denied the government’s request, but the government still has appeal rights. It remains to be seen whether it will exercise those rights and file an appeal.
We believe the government will surely appeal. We also anticipate the government will report to the CIT, as soon as Friday, that programming or other difficulties associated with liquidating the over 71 million entries that were filed in the last year with IEEPA tariffs prevents the government from immediately implementing the CIT’s order (thus buying the government time to appeal). Surely, the government will argue on appeal that the CIT has no authority to order CBP to do anything with regard to importers who are not in court. If we are correct re the government appealing and the government slow rolling compliance with the CIT’s order, then that means refunds will NOT flow immediately to importers.
It bears remembering that the government stated at today’s hearing that it does not believe every importer is entitled to a refund of all the IEEPA tariffs an importer has paid. Judge Eaton reminded the government that “I’m not 100% sure that this will be CBP’s decision” to make and that the law is 100% clear but that does not mean the government, absent direction from the White House, will simply waive the proverbial white flag on refunds.
Comments made by the Justice Department at today’s hearing point to the fact that CBP (presumably at the White House’s direction) does not want to issue full refunds to everyone, which is hardly a surprise. And while Judge Eaton has issued his order telling CBP to start refunding to all importers the IEEPA tariffs paid on unliquidated and not finally liquidated entries, it bears remembering that the appeals court will surely have something to say about today’s order.
Lastly, Judge Eaton noted that the Chief Judge of the CIT (Chief Judge Mark Barnett) directed Judge Eaton to handle all of the 2100 cases that have been filed and stayed pending the outcome of the V.O.S. decision. As of this writing, Chief Judge Barnett has not assigned Judge Eaton the cases, but it now seems clear that the CIT judge who will oversee the refund process believes (1) the law is clear that the IEEPA tarifs were unlawfully collected and (2) that the IEEPA tariffs were void ab initio so everyone should get a refund.
How Judge Eaton’s belief (and now order) will intersect with the White House’s decision making and how it will play out on appeal, particularly with regard to those who have not filed suit yet, remains to be seen. While importers, particularly those who have filed a refund lawsuit, have scored an important victory today, the fight is not over.
We will continue to monitor developments and update you as the case progresses. In the meantime, importers who have not already taken action should consult with their regular trade/customs counsel re steps to take to best protect their rights to refunds, including whether it is advisable to immediately file a refund lawsuit, whether to file protests to attempt to keep liquidation from being final, etc.
Importers are also reminded to make sure they have an ACE account with ACH refunds enabled in ACE.
If you have any questions, please contact our office.