Importers suffering “significant financial hardship” related to COVID-19 have an extra 90 days to pay tariffs. The U.S. Treasury Department and U.S. Customs and Border Protection (CBP) issued a joint temporary final rule detailing a 90-day deferment on the payment of duties, taxes and fees for certain goods imported, or withdrawn from a warehouse, in March or April 2020. The rule, which is effective as of April 20, 2020, follows an April 18, 2020 executive order from President Donald Trump authorizing a deadline extension for tariff payments. Tariffs associated with antidumping and countervailing duties as well as a range of tariffs imposed by the Trump Administration are not eligible for the payment deferral.
The rule follows the CBP’s brief efforts in March to consider case-by-case requests to delay duty payments for importers affected by COVID-19. The Trump Administration’s decision to delay payments is more narrow than the calls from business groups and members of Congress to cancel or suspend tariffs entirely and is similar to the Treasury’s earlier decision to postpone due dates for Federal income tax payments.
The joint temporary final rule grants “importers of record with a significant financial hardship” a 90-day deferral to “deposit certain estimated duties, taxes, and fees that they would ordinarily be obligated to pay as of the date of entry, or withdrawal from warehouse, for consumption, for merchandise entered in March or April 2020.” The 90-day period begins on the date that the deposit would otherwise have been due, and no interest on the delayed deposits will accrue during the 90 days. The rule also waives the deposit requirement for entries in which the time of entry is contingent on the deposit of the estimated payments.
Significant Financial Hardship
To qualify for the deferral, an importer must demonstrate a significant financial hardship from COVID-19. This requires that:
- The importer’s operations were fully or partially suspended during March or April 2020 due to a government order limiting commerce, travel, or group meetings; and
- The suspension order resulted in the importer’s gross receipts for March 13-31, 2020 or April 2020 falling to less than 60 percent of the gross receipts for the comparable period in 2019.
An importer must maintain documentation that it meets the requirements for relief. It does not need to file additional documentation with CBP.
The postponement does not apply to imports subject to antidumping duties, countervailing duties, Section 232 tariffs, Section 201 tariffs, or Section 301 tariffs. Notably, this covers Trump administration Section 232 tariffs on steel and aluminum, Section 201 tariffs on solar panels and washing machines, and Section 301 tariffs on Chinese imports. The CBP anticipates that importers will file separate entries when a shipment contains both eligible and ineligible products.
The temporary postponement is also for future deposits only, as it does not permit the return of any deposits already paid. It also does not apply to deadlines for the payment of other debts to the CBP, including payments due upon liquidation or reliquidation, deadlines for the payment of fees for certain customs services, or deadlines for the payment of any penalty or liquidated damages.
Effective Date and Comment Period
The temporary final rule became effective April 20, 2020. The CBP found that prior notice and comment procedures were impracticable given the national emergency and bypassed the 30-day delay for an effective date. Interested parties, however, can submit comments on the temporary final rule until May 20, 2020.
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