The importing trade community has spent considerable time and effort over the last several weeks in soliciting the Administration to postpone or delay duty payments in light of the current financial hardships many companies are facing due to the COVID-19 pandemic. Over this last weekend, some accommodations have been made available by the Administration for eligible importers.
On Saturday, April 18, 2020, President Trump issued an Executive Order permitting the Secretary of the Treasury to adjust the deadlines related to payment of duty. On April 19, 2020, Customs and Border Protection (Customs) issued a Temporary Final Rule that implements the Executive Order. Importers of record who are suffering a significant financial hardship due to the COVID-19 virus may postpone their deposit of certain estimated duties, taxes, and fees for 90 days. However, there are significant limitations on eligibility for this deferral.
What duties are eligible for the deferment?
This temporary deferral program applies to regular (MFN) duties on formal entries of merchandise entered, or withdrawn from warehouse, for consumption on or after March 1, 2020, and no later than April 30, 2020, as well as taxes and fees (including merchandise processing fees and cotton fees). The duties on these entries may be deferred up to 90 days from the payment due date. Customs will not return deposits of estimated duties, taxes, and fees that have already been paid. The duty payment deferral is not available for entries that are subject to trade remedies, including antidumping duty, countervailing duty, Section 201 (solar panels and washing machines) duties, Section 232 (steel and aluminum) duties or Section 301 (China) duties. Merchandise that has been granted an exclusion from Trade Remedy duties qualify for the 90-day deferred payment, as long as the exclusion is in effect at the time of entry.
Which importers are eligible for the deferment?
This deferment program is only for importing companies who are suffering a significant financial hardship. An importer will be considered to have a “significant financial hardship” if the operation of such importer is fully or partially suspended during March 2020 or April 2020 due to orders from a competent governmental authority limiting commerce, travel, or group meetings due to COVID-19, and as a result of such suspension, the gross receipts of such importer for March 13-31, 2020 or April 2020 are less than 60 percent of the gross receipts for the comparable period in 2019.
How do importers claim the deferral of duties?
Eligible importers do not need to apply to Customs for the deferral or obtain an approval from Customs for this relief. However, they should maintain documentation as part of their records establishing their eligibility in the event Customs conducts a post-entry review or audit to ensure compliance. Importers should contact their customs broker to set up the deferred payment dates for their duties.
Where can importers get more information?
Customs’ website is your best resource for up-to-date information about this temporary program. We recommend viewing their COVID-19 90-Day Duty Postponement Frequently Asked Questions. TLR’s compliance professionals are also available to answer any questions you might have about this program and can be contacted at firstname.lastname@example.org.