On December 18, 2018, US Customs and Border Protection (CBP) published in the Federal Register, a final rule [CBP Dec. 18-15; USCBP-2018-0029] that adopts with changes proposed amendments to the CBP regulations implementing changes to the drawback regulations, as directed by the Trade Facilitation and Trade Enforcement Act of 2015 (TFTEA). These regulations establish new processes for drawback pursuant to TFTEA, which liberalize the merchandise substitution standard, simplify recordkeeping requirements, extend and standardize timelines for filing drawback claims, and require the electronic filing of drawback claims. The document also provides details with respect to the process required to perfect TFTEA-based claims filed under CBP’s Interim Guidance procedures. Further, this document also finalizes regulations clarifying the prohibition on the filing of a substitution drawback claim for internal revenue excise tax in situations where no excise tax was paid upon the substituted merchandise or where the substituted merchandise is the subject of a different claim for refund or drawback of tax.
CBP has been under an order of the US Court of International Trade to issue the final regulations by December 17, 2018.
The final rule, with the exception discussed below, was effective on December 17, 2018 (the date of the Office of the Federal Register posting for public inspection).
The effective date for amendments regarding the drawback of excise taxes (§§ 190.22(a)(1)(ii)(C), 190.32(b)(3), 190.171(c)(3), 191.22(a), 191.32(b)(4), and 191.171(d)) is February 19, 2019.
In connection with the above final rule, CBP issued CSMS 18-000737 on December 17, 2018, governing the processing of claims for Accelerated Payment, which reads as follows:
Today, December 17, 2018, the Modernized Drawback Final Rule is posted online for public inspection. The regulations necessary for CBP to begin processing payments for Accelerated Payment (AP) on TFTEA drawback claims are now effective. Please access the posting online at the following link: https://s3.amazonaws.com/public-inspection.federalregister.gov/2018-26793.pdf.
CBP is returning certain TFTEA drawback claims to trade control in anticipation that these claims will be resubmitted with a request for AP.
The process for resubmission is as follows:
1. TFTEA claims with bond information on file will be placed in trade control.
2. Filer will select the AP indicator.
3. Filer will resubmit the claim.
4. Resubmission will not change the original claim date.
5. Claimant must have the appropriate approved privileges on file.
6. Upon claim acceptance by CBP, AP processing will generally take place within 3 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: OTDRAWBACK@cbp.dhs.gov.
Additional Steps Required to Request AP for Certain Claims:
1. TFTEA manufacturing claims – Trade must update claims on file with the new manufacturing ruling number once an approval letter for TFTEA modification is received from CBP. After the claims are updated with the new ruling number, claimants will select the AP indicator and resubmit claim.
2. TFTEA substitution drawback claims potentially subject to limitations on internal revenue tax refunds (accounting class code 365) – Trade is advised not to submit additional AP claims with the accounting class code 365 until notified by 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. The above guidance regarding TFTEA substitution claims with class code 365, does not apply to the Oil Spill Tax, and the Harbor Maintenance Tax.
Direct relevant questions to the OT Mailbox at OTDRAWBACK@cbp.dhs.gov.
