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Special Edition: Tariff Refund Platform Available
Welcome back to a special episode of “Tackling Tax,” where we bring you the latest tax policy and strategy updates in a simple, straightforward format. Whether you want to understand new tax bills, grasp global tax implications, or uncover planning ideas for your business, you’re in the right place.
In this episode, we’ll focus on the U.S. Customs and Border Patrol’s CAPE system. This platform allows importers of record, along with their brokers, to start claiming International Emergency Economic Powers Act (IEEPA) tariff refunds. We’re excited to welcome Michael Cornett from our Washington National Tax Office to guide us through the details.
If you have any questions or need any assistance, please reach out to a professional at Forvis Mazars.
Transcript
IRIS LAWS
U.S. Customs and Border Patrol has officially announced and launched their CAPE system, which is the platform that they're using to allow importers of record and their brokers to start the process for getting back IEEPA tariff refunds. So, joining me today on this very special edition of “Tackling Tax” is Michael Cornett from the firm's Washington National Tax Office. Welcome, Mike.
MICHAEL CORNETT
And good morning, Iris. Good to be here.
IRIS LAWS
So, give us, sort of, you know, this announcement happened. People can officially get into the platform and start the process. But what does that look like from an action item perspective? What, really, are the steps they need to do now?
MICHAEL CORNETT
Well, a couple steps you need to do now. One, you need to make sure you have a valid Form 5106 on file, which has your importer of record information on it. Then you have to make sure you have access to the ACE system. So, you'll have to go into the portal, and there's a link that'll take you to see if you have access.
If you don't, you'll have to create a top account, as they call it, to be able to access the ACE system. If you've been using a broker to do that, so you're under a broker system, then the brokers, you have to work with your broker to get access to the system to, you know, process your refund claim.
IRIS LAWS
So, they've rolled out this system and you've gotten into your ACE portal. What does the upload process look like? Is it really cumbersome? What is the information that you actually put in in order to get this going?
MICHAEL CORNETT
So, you will upload what they call a CSV file to the CAPE system portal. That CSV file will contain entry numbers, importation entry numbers, which then will be matched up in the system once it's uploaded. You can load up to 9,999 entry numbers on one submission.
IRIS LAWS
Great. So, I know the IRS and the government are focusing lately a lot on being paperless, even with payments, right? So, will refunds only be available electronically, or if people would like a check, is that possible?
MICHAEL CORNETT
Refunds here will only be available electronically, so it is important that you get your banking information submitted into the ACE portal, so that you will get the refund once it has been processed.
IRIS LAWS
And what's the timing? I think that's the big question, right, Mike, is we've gotten through this process. We've filed a CAPE declaration. When can our folks expect to get their money?
MICHAEL CORNETT
It's estimated about three months or so from the time that declaration is filed, that you'll be able to get an actual refund.
IRIS LAWS
Is there any chance that there will be a change in maybe the rules or any change in the availability of getting a refund? I mean, I think there's been so much change right in the policy and how this is coming through. Is there still a chance of a government appeal here?
MICHAEL CORNETT
I mean, the government window for an appeal is still open until June 8th to appeal the Court of International Trade's decision to repay the IEEPA tariffs. But we'll have to wait and see if they actually take advantage of that, given that they've put so much effort to building this system, the system is open. The fact that they've made so many statements to the court that they will pay the refunds, most people, I think, suspect there will not be any appeal.
IRIS LAWS
So, I'm going to talk this back just high-level as everyone is thinking through this process. So, what I'm hearing from you, Mike, is you want to file your Form 5106. Make sure that that's updated if you already have one. You want to make sure you have ACE access, which is the online portal through CBP, and work with your broker if it's through them. You want to upload this CSV file with the entry numbers of the imports with IEEPA tariffs. You want to be sure that your banking information is correct given refunds will be made electronically. And then we're looking at about a three-month period. Is that about right?
MICHAEL CORNETT
Yeah that's a good summary, Iris. I mean again, that three-month period is based upon when you have a valid, you know, claim that's gone through the whole process. But then you are correct. You will get that refund when it's validated.
IRIS LAWS
And I guess it's important to point out, right, that this is just phase one of the roll-out of CAPE, so there will be future phases. Right now this is just for unliquidated entries and those entries that have been liquidated within the past 80 days. So, there will be future phases for different categories of your imports, so you want to be sure that you're categorizing all of your different entries based on the time frame and their liquidation status.
MICHAEL CORNETT
Yeah, that's correct. And I think just something to point out here is, you know, this is going to take time. There's going to be hiccups along the way. There was already, on day one, slowdowns in the system because of the volume.
I mean you also have to remember, as an importer of record, you have to file to get the refund. There's nothing automatic about this. The government has estimated there are 330,000 importers of record that paid IEEPA tariffs. So far, only 56,000 have actually provided all the information necessary in terms of banking information, 5106. So, you can see there's still a lot of room left for importers to do some work to get into the system.
IRIS LAWS
Great summary. Thanks for chatting with us today, Mike.
MICHAEL CORNETT
My pleasure.
ANNOUNCER
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