U.S. Provides 90-Day Temporary Postponement of Depositing Import Duties
- Commencing April 22, 2020, the U.S. government will issue rules to postpone the deposit of certain estimated duties, taxes and fees on merchandise entered into the United States in March and April for 90 days for importers with a significant financial hardship.
- The temporary postponement does not apply to entries or withdrawals subject to antidumping, countervailing, Section 201, 232 or 301 duties.
- Nor does it apply to payment of other debts to U.S. Customs and Border Protection (CBP), e.g., the payment of duties, taxes, fees and interest determined to be due upon liquidation or reliquidation.
The U.S. Department of the Treasury (Treasury) and U.S. Customs and Border Protection (CBP) released an advance copy of a temporary rule to postpone the deadline for importers of record with a significant financial hardship to deposit certain estimated duties, taxes and fees for a period of 90 days from the date that the deposit would otherwise have been due. The rule is anticipated to become effective upon publication in the Federal Register on April 22, 2020.
The proposed rule followed an Executive Order entitled "National Emergency Authority to Temporarily Extend Deadlines for Certain Estimated Payments" signed by President Donald Trump on April 18, 2020, authorizing Treasury, in consultation with the U.S. Department of Homeland Security, to temporarily extend deadlines for the estimated payments for those importers suffering significant financial hardship because of COVID-19, subject to certain exceptions. 1
A. Eligible Importers
To be eligible for the temporary postponement, an importer of record must demonstrate a significant financial hardship by showing that:
- the importer's business operations are fully or partially suspended during March or April 2020 due to orders from a competent governmental authority limiting commerce, travel or group meetings because of COVID-19
- the gross receipts of the importer for March 13-31 or April 2020 are less than 60 percent of the gross receipts for the comparable period in 2019 as a result of the suspension
An eligible importer does not need to file additional documentation with the CBP. Such an eligible importer would be required to maintain documentation as part of its own books and records establishing that it meets the above requirements for the temporary postponement.
B. Eligible Entries and Duties
The temporary postponement applies to the deposit of estimated duties, taxes and fees that would otherwise be due as of the date of entry – or withdrawal from warehouse, for consumption – of entries or withdrawals made on or after March 1, 2020, and no later than April 30, 2020.
The temporary postponement does not apply to entries or withdrawals subject to one or more of the following trade remedies:
- antidumping or countervailing duties (AD/CVD)
- duties assessed under Section 232 of the Trade Expansion Act of 1962
- duties assessed under Section 201 duties of the Trade Act of 1974
- duties assessed under Section 301 duties of the Trade Act of 1974
Nor does it apply to payment of other debts to the CBP, such as the payment of duties, taxes, fees and interest determined to be due upon liquidation or reliquidation, fees collected under 19 U.S.C. 58c (except for merchandise processing fees and dutiable mail fees), and payment of any penalty or liquidated damages.
No deposits of estimated duties, taxes and/or fees that have been paid to the CBP are eligible for a temporary refund.
C. No Interest or Penalty
No interest that would otherwise accrue on the deferred deposit of duties, taxes and fees will accrue during the 90-day postponement period.
No penalty, liquidated damages claim or other sanction will be imposed for the delayed deposit of estimated duties, taxes and fees under this rule.
The no-interest deferred payment of deposits of duties, taxes and fees could be regarded as a free short-term loan for importers of records with a significant financial hardship in March or April 2020. Importers planning to take advantage of the new rule should:
- determine whether the importer of record is an eligible importer under the new rule
- file separate entries for a shipment containing both merchandise that is eligible for temporary postponement and merchandise subject to a trade remedy measure
- maintain accurate internal records demonstrating that the importer and the entries are eligible for the temporary postponement of deposits of duties, taxes and fees.
Because this is relatively limited relief given 1) the low level of "regular" duties compared to AD/CVD and Section 201, 232 and 301 duties, and 2) that the relief applies only to the deposit of duties and not the ultimate payment upon liquidation, importers continue to push the U.S. government for broader relief. Holland & Knight's International Trade Group will continue to monitor any further actions taken by Treasury and the CBP in response to the extraordinary challenges facing U.S. importers. If you have any questions about applications of the rule, please reach out to the authors.
DISCLAIMER: Please note that the situation surrounding COVID-19 is evolving and that the subject matter discussed in these publications may change on a daily basis. Please contact your responsible Holland & Knight lawyer or the author of this alert for timely advice.
Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem. Moreover, the laws of each jurisdiction are different and are constantly changing. If you have specific questions regarding a particular fact situation, we urge you to consult competent legal counsel.
1 See CBP Bulletin, "90 Day Postponement of Payment for the Deposit of Certain Estimated Duties, Taxes, and Fees," April 19, 2020.