Customs Brokerage & International Freight Forwarding Blog

Duty Drawback: Are You Eligible for a Rebate?

Written by Christy Gustafson | May 25, 2018 7:45:54 PM

Drawback, a.k.a, duty drawback was initially established in 1789 as an export incentive program to promote U.S. innovation and manufacturing around the world. 229 years later, after several revisions, it's still in effect!

How Does Duty Drawback Benefit Importers?

It allows a monetary rebate of certain duties on goods imported into the United States through U.S. Customs. If these goods are then exported afterward, importers, exporters, and manufacturers could be eligible for a refund.

What has Duty Drawback looked like?

1980: Congress amended the duty drawback law to allow for 99% of taxes, duties, and fees to be refunded when imported merchandise is exported, or destroyed, within three years of entering the United States.

Fast forward to February 24, 2016; the President signed Public Law 114-125, which enacted the new duty drawback law HR 644 “The Trade Facilitation and Trade Enforcement Act of 2015”. Confusing, I know, but the dates are correct. TFTEA, as it's known, was written in 2015 and signed into law in 2016.

This provided massive change to U.S. duty drawback rules and sweeping enhancement of the law, expanding opportunities in nearly every segment of the U.S. economy for refunds on imported goods that are then exported.

Two years later, on February 24, 2018, a new drawback statute took effect with changes aiming to simplify the process, reduce paper usage, and decrease costs.

Finally, on February 24, 2019, all drawback claims must be filed according to TFTEA. 

Major Changes

  • One-year transition rule will allow claimants to use old or new statute
  • Match by 8-digit HTS, instead of product code
  • Time-frame for claims will increase from three to five years from Date of Import
  • Certificates of Delivery and Manufacture will no longer be required
  • Record retention for three years after liquidation, instead of three years after payment
  • NAFTA Restrictions
  • Electronic claims (ACE) will reduce paper usage!

They couldn't stop there with the revisions though, let's keep going...

Additional Changes

  • New rules for calculating drawback amount
  • Track value for exported items and components used in manufacture
  • Drawback for recovered materials
  • Proof of export – normal business records
  • Electronic forms of proof of export allowed
  • Importer/Claimant – Joint and several liability

And, we cannot leave out changes to regulations. Read on.

Regulation Changes

  • ‘Lesser of’ instructions and applications
    • Export value
    • Destroyed merchandise
    • Substituted components in manufacture
  • Taxes and fees recoverable
  • Proof of exportation requirements update

There are seemingly many changes to the laws and rules, with MANY moving parts for eligibility. But for some, this opportunity is too great to miss.

So, Is My Company Eligible for a Drawback Refund?

Possibly. Do you import and export goods in the U.S.? Have you returned or destroyed imported merchandise? Many more questions would need to be answered to fully determine your eligibility. This is just the tip of the iceberg, and requires someone with in-depth knowledge to guide the process of considering drawback eligibility.