IEEPA Tariff Refund Process

The Supreme Court recently ruled that President Trump exceeded his legal authority by asserting tariffs under the International Emergency Economic Powers Act (IEEPA). This ruling rendered those tariffs invalid, including the reciprocal tariff regime which imposed worldwide tariffs of 10% or higher, and tariffs imposed on China, Canada, Mexico, and other countries.

The ruling prevents Customs and Border Protection (CBP) from continuing to levy tariffs under the IEEPA. However, it did not directly address how to resolve tariffs that had already been charged or paid. The administration can still use other statutes, such as Section 232, Section 301, or Section 122, to collect tariffs.

The IEEPA Tariff Refund Process

On March 4, the U.S. Court of International Trade (CIT) issued a refund order in a case over assessed IEEPA tariffs. The court indicated that it could apply to all importers who have paid the tariff.

Under the order, CBP would need to create an automatic mechanism to issue IEEPA tariff refunds. However, two days later, the CIT issued a temporary pause to its previous order. The CBP declared that it would not be able to create an automatic refund process within the court's timeframe.

On March 12, CBP’s executive director filed another declaration with the CIT, stating that the agency was creating a new online system, called the Consolidated Administration and Processing of Entries (CAPE), for importers to register and receive valid refunds.

CBP provided a target go-live for CAPE of 45 days, suggesting refunds could begin as early as late April. It also laid out a four-step process for importers to claim refunds under CAPE:

1. Importers or their customs brokers must submit a CAPE Declaration via the new web-based portal in the Automated Commercial Environment (ACE). This involves uploading CSV files with a list of entry summaries for the IEEPA refunds.
2. CAPE will automatically remove the tariff codes from each entry and recalculate the total duties owed as if those tariffs never applied.
3. CAPE schedules a date to finalize (liquidate or reliquidate) the entries and applies interest (currently at 6% for corporations) to the final amount owed.
4. Refunds are consolidated by the Importer of Record (IOR) and paid electronically.

In an update on March 19, CBP reported substantial progress toward CAPE’s development, with mass processing the only process estimated at less than halfway complete. Further updates are expected by the end of the month.

It is important to note that the CAPE process does not address final, liquidated entries, and these may be subject to additional protest obligations or legal action.

Importers who have paid IEEPA tariffs are advised to closely follow developments in these cases and make sure they have supplied CBP with up-to-date information.

How Eide Bailly Can Help

We help clients who have paid refundable IEEPA duties by:

• Process mapping to identify the sequence and timeline of steps required before CAPE is implemented. Common examples include:
  • Confirm Importer of Record status for duties paid (only registered IORs will receive refunds, regardless of who ended up bearing the cost of the tariffs financially)
  • Ensure enrollment in ACH
  • Verify active ACE portal access
  • Compile data on IEEPA levies paid in the proper format, broken out by liquidation status
• Stakeholder mapping for identifying key internal and external parties at each step in the refund process.
• Quantitative modeling of IEEPA duties data to estimate the extent and financial impact of potential refunds.
• Assistance with the tax and accounting treatment of potential refunds.
• Referrals to licensed customs brokers in cases where clients wish to delegate customs business.

We continue to closely monitor these developments, and our international tax and transfer pricing teams can help you understand the next steps.