Analysis from the firm of Roll & Harris
We would like to share the following update from the law firm Roll & Harris LLP, which offers a thorough analysis of the current developments:
"On Friday (May 29th), the government made clear that it intends to appeal the Court of International Trade’s (“CIT’s”) sweeping IEEPA tariff refund order. While the government has yet to officially file its notice of appeal and the outcome of any such appeal remains to be seen, the implication from Friday’s government announcement is that any importer who (1) has entries that were ineligible for, or that failed, CAPE “Phase 1” processing and (2) has not yet filed an IEEPA tariff refund lawsuit, should strongly consider filing an IEEPA tariff refund lawsuit.
According to the government’s Friday filing, there are 3 groups of importers/entries:
Group 1: Importers with entries that are unliquidated or not “finally liquidated.”
Group 2: Importers with “finally liquidated” entries but who have filed refund lawsuits.
Group 3: Importers with “finally liquidated” entries but who have NOT filed refund lawsuits.
We note that importers can be in both groups 1 and 2 OR in both groups 1 and 3 since the same importer can have some entries that are unliquidated and some that are "finally liquidated."
Regarding Group 1, the government believes such entries remain within U.S. Customs & Border Protection's ("CBP") authority to refund and can, therefore, be processed via CBP’s CAPE existing refund module.
For Group 2, the government believes that tariffs paid on “finally liquidated” entries cannot be refunded absent a court order and that the court must issue an importer specific refund order as a condition for CBP to be able to refund the tariffs paid by that importer. We note that while the court has not yet issued import specific refund orders, the CIT could issue such orders since this group of importers already has refund lawsuits on file.
Lastly, and most importantly, for Group 3, the government believes that there is no legal authority for such importers to obtain refunds on the “finally liquidated” entries and that the government will appeal any CIT order requiring CBP to refund such tariffs.
Friday’s filing does not explicitly say there will be no CAPE “Phase 2” for “finally liquidated” entries, but given the government’s stated intent to appeal and its categorization of the 3 groups of importers, it seems clear, at least to us, that the government will not be creating a CAPE “Phase 2” for such entries. Per CBP’s filings in the CIT, there are approximately 330,000 importers who have paid the illegal IEEPA tariffs. At the same time, a review of the CIT case management system reveals that there are only between 3,000 and 4,000 importers who have filed tariff refund lawsuits. Measured as a percentage of the total number of importers who have paid the illegal tariffs, this means only about 1% of all importers have filed tariff refund lawsuits. Only this 1% group of importers is, therefore, on the path to receiving FULL refunds of ALL IEEPA tariffs they have paid. The other 99% of all importers may receive full refunds, but only if they are in Importer Group 1 and not in Importer Groups 2 or 3. This is a minority of importers since most importers will have at least some entries that are “finally liquidated.”
To be sure, the government is refunding a significant amount of money via CAPE. Per government statistics submitted to the court, the government has received and accepted CAPE refund claims on approximately $85 billion out of the over $166 billion in IEEPA tariffs it has collected. See here and here. But, for those importers who (1) have filed in CAPE and received error messages for some of their entries, (2) are not eligible to file in CAPE (e.g., importers in CBP’s reconciliation program), (3) have entries that are too old to file in CAPE (and more entries “time out” of CAPE with each passing day), or (4) are small importers unfamiliar with ACE, CAPE or how to obtain refunds, there remain billions of dollars of refunds that the government will not refund absent an importer specific court order to do so.
Finally, there remains a lack of clarity from the government over what it believes the phrase “finally liquidated” means in the context of IEEPA entries. The government does agree that entries liquidated less than 80 days ago are not “finally liquidated” because 19 USC 1501 gives the government the authority to reliquidate any such liquidations. However, it remains an open question, at least for now, as to whether the government agrees that entries that are the subject of an administrative protest against the assessment of IEEPA tariffs are also not “finally liquidated.” Since a protest can reach back to liquidations that occurred 180 days prior to the protest filing date, approval of such protests would drastically lessen, and in many cases eliminate, the need for importers to file individual refund lawsuits. Conversely, denial of such protests would require importers to file refund lawsuits in order to preserve their rights to refunds on such entries.
In sum, Friday’s filing makes it clear that the government does not intend to voluntarily or easily refund ALL IEEPA tariffs to ALL importers. Given Friday's developments and the continued clarity from the government regarding what "finally liquidated" means, each importer should speak with its customs counsel to determine the best way to maximize chances for a full and complete IEEPA tariff refund."
Disclaimer: The information provided in this notice is for informational purposes only and does not constitute legal advice. Importers are encouraged to consult with their customs counsel. For additional information or questions, please contact Michael Roll at (310) 294‑9501 or michael.roll@thetradelawfirm.com, or Brett Harris at (845) 255‑1850 or brett.harris@thetradelawfirm.com.
We will continue to monitor developments and provide updates as appropriate. For questions regarding your shipments, please contact your Deringer representative or customs attorney.