Effective immediately, U.S. Customs and Border Protection (CBP) is amending the CBP regulations to permit importers to temporarily postpone the deposit of certain estimated duties, taxes and fees. Ordinarily, those estimated duties, taxes and fees must be paid by importers for their merchandise as of the date of its entry, or its withdrawal from warehouse, for consumption. However, for certain merchandise entered in March or April 2020, qualified importers may postpone payment for a period of 90 days from the date that the deposit would otherwise have been due.

The temporary postponement is limited. It does not apply to all entries, and not every importer qualifies. The temporary postponement does not apply to entries, or withdrawals from warehouse, subject to certain specified trade remedies, including antidumping and countervailing duties, and the retaliatory tariffs assessed against Chinese goods under Sections 232 and 301 of the Trade Act of 1974. The postponement will either apply or not apply to an entire entry, so any goods subject to an inapplicable duty will disqualify the entire entry. CBP anticipates that importers will file separate entries for eligible and ineligible merchandise, to take advantage of the postponement if possible.

In addition, an importer must demonstrate a significant financial hardship to qualify for the temporary postponement. An eligible importer’s operation must be 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, 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. No specific documentation must be filed with CBP to establish an importer’s eligibility for relief. However, importers must maintain documentation as part of their books and records establishing that they meet the requirements for relief.

For qualified importers entering eligible merchandise, the postponement can provided needed—albeit temporary—relief from duties, taxes and fees on goods needed for their businesses during a time of reduced or no revenue. CBP’s amendment implements the President’s Executive Order entitled “National Emergency Authority to Postpone the Time to Deposit the Payment of Certain Estimated Duties, Taxes, and Fees” authorizing the Secretary of the Treasury to take action pursuant to the authority in Section 318(a) of the Tariff Act of 1930. The Notice of Temporary Final Rule from CBP acknowledges that many importers of record are undergoing significant financial hardship with operations fully or partially suspended during March or April 2020 due to orders from competent governmental authorities imposing limits on commerce, travel or group meetings because of COVID-19. Employees are having difficulty getting to work or are having technical issues with working remotely, and many major retail chains and other businesses are closing for business—either voluntarily in response to the President’s call or following state or local government requirements. As a result, “[t]his emergency action is being taken in response to the extraordinary challenges facing U.S. individuals and businesses during the COVID-19 national emergency (which significantly affects the trade community) . . .”

It is important to note that this action is only a postponement, and qualified importers that take advantage of this opportunity will be expected to pay the postponed amounts after the 90-day period. Also, because the time of entry for some types of entries is contingent (in part) upon the deposit of estimated duties, taxes and fees, to ensure clarity under the applicable CBP regulations—for entries eligible for the temporary postponement of deposits—CBP is waiving the requirement to deposit estimated duties, taxes and fees for the purpose of establishing the time of entry.

Opinions and conclusions in this post are solely those of the author unless otherwise indicated. The information contained in this blog is general in nature and is not offered and cannot be considered as legal advice for any particular situation. The author has provided the links referenced above for information purposes only and by doing so, does not adopt or incorporate the contents. Any federal tax advice provided in this communication is not intended or written by the author to be used, and cannot be used by the recipient, for the purpose of avoiding penalties which may be imposed on the recipient by the IRS. Please contact the author if you would like to receive written advice in a format which complies with IRS rules and may be relied upon to avoid penalties.