On April 18, President Trump issued an Executive Order (the “EO”) granting the Secretary of the Treasury (the “Secretary”) the authority to temporarily extend the deadline for the payment of certain estimated import duties. To enact the authority granted by the EO, on April 20, the Department of Homeland Security issued a temporary final rule (the “Temporary Final Rule” or the “Rule”) amending US Customs & Border Protection (“CBP”) regulations. The Temporary Final Rule postpones the deadline for importers of record to deposit certain estimated duties, taxes, and fees for a period of 90 days. The extension applies to importers of record suffering significant financial hardship due to COVID-19. As described in more detail below, however, the authority does not apply to several types of import assessments. Although the Rule is not yet published in the Federal Register and has not gone through notice and comment, it is in effect immediately under the “public interest” exceptions set forth in the Administrative Procedure Act. Interested parties, nonetheless, have until May 20, 2020, to submit comments to the Rule.
The 90-Day Postponement
The Temporary Final Rule amends the CBP regulations by temporarily adding a section 24.1a to 19 C.F.R. Part 24. This new section temporarily postpones the deadline for importers of record to deposit certain estimated duties, taxes, and fees that they ordinarily would be obligated to pay as of the date of entry, or withdrawal from warehouse, for consumption, for merchandise entered in March or April 2020 for a period of 90 days from the date that the deposit would otherwise have been due. No interest will accrue during this 90-day period.
The temporary postponement applies only to entries, or withdrawals from warehouse, for consumption, made on or after March 1, 2020, and no later than April 30, 2020. For those entries for which the time of entry is contingent upon the deposit of estimated duties, taxes, and fees, the Temporary Final Rule includes a waiver allowing the time of entry to be established in the absence of the deposit of the estimated duties, taxes, and fees postponed in accordance with the Temporary Final Rule.
CBP has published instructions for submitting 90-day postponement payments.
Significant Financial Hardship
Only importers of record who have suffered significant financial hardship due to COVID-19 will be eligible for this relief. An importer has suffered “significant financial hardship” if its operation is 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. In addition, as a result of such orders, the gross receipts of an importer for March 13–31, 2020, or April 2020 must be less than 60 percent of the gross receipts for the comparable period in 2019.
Importers are not required to submit additional documentation with CBP to be eligible for this relief, but, as part of their books and records, they must maintain documentation establishing hardship.
The Temporary Final Rule does not permit the return of any deposit of estimated duties, taxes, and/or fees that already has been paid. The postponement also does not apply when the entry summary includes any merchandise subject to one or more of the following: antidumping duties; countervailing duties; or Section 232, 201, or 301 Trade Remedies. When a shipment contains both merchandise that is eligible for temporary postponement and merchandise that is ineligible, importers should file separate entries for the eligible and ineligible merchandise. The inclusion of ineligible merchandise will prevent an importer from taking advantage of the 90-day postponement period, even if the entry otherwise consists of eligible merchandise.
In addition, the temporary postponement does not apply to deadlines for the payment of other debts to CBP, such as payment of bills for duties, taxes, fees, and interest determined to be due upon liquidation or reliquidation; payment of fees authorized under 19 U.S.C. § 58c (which covers fees for certain customs services, but an exception exists for merchandise processing fees and dutiable mail fees); and payment of any penalty or liquidated damages due to CBP.
The Temporary Final Rule offers flexibility to importers with a significant financial hardship due to COVID-19. Eligible importers interested in taking advantage of this relief should take steps to ensure that they are complying with the Rule’s requirements, including keeping records of their hardship and filing separate entries for eligible and ineligible merchandise. The temporary postponement currently applies only to entries or withdrawals made on or after March 1, 2020, and no later than April 30, 2020. However, importers should follow the CBP Office of Trade for the issuance of any additional postponements.
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And for any legal questions related to this pandemic, please contact the authors of this article or Mayer Brown’s COVID-19 Core Response Team at FW-SIG-COVID-19-Core-Response-Team@mayerbrown.com.