2015’s Trade Facilitation and Trade Enforcement Act (TFTEA) included many changes for U.S. importers; among them were significant changes to U.S. duty drawback regulations and timeframes.
Signed into law in 2016, many of TFTEA’s drawback changes are scheduled to come into sole effect as of February 24, 2019, on the three-year anniversary of the Act passing into law. From February 24, 2018 to February 2019, U.S. Customs & Border Protection (CBP) allowed a transition period under which both pre-existing or new processes could be utilized.
Under legacy drawback regulations, the timelines used to determine available transactions for drawback purposes could be very confusing. TFTEA was designed to simplify this for both manufacturing and unused merchandise drawback claims. Under the new regulations, parties may file for drawback covering imports up to 5 years prior to the claim date. In the case of manufacturing drawback, the manufacturing process must be completed with 5 years of import. In many cases, this extends the available drawback window from 3 years under the current regulations to 5 years under the new TFTEA regulations.
Another change under TFTEA is that U.S. Customs will no longer accept paper drawback claims filed in hardcopy or by paper. All drawback claims need to be filed electronically as of February 24, 2019. Other important drawback updates under TFTEA include:
- Drawback claims may now include applicable import taxes and fees in addition to 99% of the duties paid for recovery purposes.
- A Waiver of Prior Notice will now be allowed for destruction drawback, provided that the destruction is completed as part of an ongoing process and proper documentation is available to support such a claim.
- Goods set for destruction must be valued prior to destruction in order to qualify for a drawback claim.
- The acquisition value or the production cost of the merchandise contained in a manufactured product is new data that may be required under TFTEA to complete a claim. This information can be determined by the generally accepted accounting principles (i.e. GAAP).
- Customs previously stated filings through the Automated Export System (AES) will be accepted as proof of exportation for drawback purposes. However, CBP has not yet officially approved the use of that electronic export system data for drawback filing purposes.
Our in-house U.S. drawback practice uses advanced data management and filing applications coupled with years of expertise to manage drawback programs for many of its clients across various industries. Drawback provides many importers and exporters an ongoing opportunity to recoup significant monies previously paid including Section 301 duties paid on Chinese goods.
Please contact your local Delmar representative or email our U.S. Customs Advisory Services Group for additional information and assistance.