Filing and processing claims for duty drawback just got easier thanks to new U.S. Customs and Border Protection (CBP) regulations, which took effect on December 18, 2018. The final rule, posted in the Federal Register, amends the Trade Facilitation and Trade Enforcement Act (TFTEA) of 2015. Benefits of this rule include a simplified drawback process, streamlined claim submissions and processing, increased time to claim drawback, simplified recordkeeping requirements, increased security for business-sensitive information, and decreased business costs.
What is Duty Drawback?
Duty Drawback is the refund of up to 99% of certain customs duties, internal and revenue taxes, and other fees collected upon the importation of goods once the imported good has been substituted or the article that has been manufactured from that product has either been exported or destroyed.
According to the CBP, this rule establishes new processes for drawback that:
- requires the electronic filing of all drawback claims
- eases documentation requirements for transferred merchandise
- reduces drawback claim data submission requirements
- liberalizes the merchandise substitution standard
- systematizes existing CBP drawback practices, such as allowing waivers of prior notice for rejected merchandise and accepting continuous bonds for drawback claims with pending accelerated payment approval
- allows mixed TFTEA and non-TFTEA substitution drawback claims
- removes the proposed requirement for joint and several liability bonds
- regulates how the CBP treats drawback of excise and other federal taxes, effective as of February 19, 2019
Please note that the CBP will not process any drawback entries during the federal government shutdown.
The CBP also announced that the rule enables accelerated payment (AP) for duty drawback claims made under the TFTEA, effective December 17, 2018. Click here to view the announcement. In anticipation that filers will want to apply for AP, the CBP is returning certain TFTEA drawback claims to enable filers to resubmit the claims with a request for accelerated payment.
- TFTEA claims with bond information on file will be placed in trade control
- The filer will select the AP indicator
- The filer will resubmit the claim
- Resubmission will not change the original claim date
- Claimant must have appropriate approved privileges on file
- Upon claim acceptance, accelerated payment processing will generally take place within three weeks of the claim resubmission date
If a TFTEA claim with 1A bond data was accepted by CBP prior to December 17, 2018, and the claim was not returned to trade control as noted above, please email the claim number to the OT mailbox at OTDRAWBACK@cbp.dhs.gov.
However, for TFTEA manufacturing claims, claims on file must be updated with the new manufacturing ruling number once an approval letter for TFTEA modification is received from the CBP. After the claims are updated with the new ruling number, claimants will select the AP indicator and resubmit the claim.
For TFTEA substitution claims with the accounting class code 365 (such as alcohol and tobacco), do not submit additional AP claims until notified by the CBP to do so. If submitted prior to notification from CBP, there is a risk of bond decrementation and loss of AP for the life of the claims.*
*Does not apply to the Oil Spill Tax or the Harbor Maintenance Tax