Effective yesterday, the US government is making available a temporary 90-day postponement of certain import payment deadlines for companies and individuals experiencing “significant financial hardship” due to the economic fallout from the novel coronavirus disease (COVID–19).
Late on April 19, 2020, the US Treasury Department and US Customs and Border Protection (CBP) released a temporary final rule, which provides that such importers may defer payment of most non-deposited estimated most-favored nation (MFN) duties, taxes, and fees on formal consumption entries without penalty or interest. MFN duties do not include antidumping or countervailing duties, or duties resulting from Section 201, 232, or 301 tariffs.
Because these charges are ordinarily due upon entry, the deferral provides temporary cash-flow relief for US importers facing financial distress and liquidity concerns. President Trump signed an executive order authorizing these deferrals over the weekend pursuant to his earlier proclamation designating the COVID–19 pandemic a national emergency.
The announcement follows a previously abandoned CBP action to provide relief, intense lobbying on both sides of the issue, and mixed signals from the Trump Administration. In March, Arent Fox reported that CBP had begun accepting case-by-case requests to defer import payments, only to have the agency backtrack days later.
CBP guidance (CSMS 42421561, CSMS 42423171), summarized below, defines significant financial hardship, outlines the charges eligible for deferral, and sets forth payment instructions and timeframes. Late yesterday afternoon, April 20, CBP also published a FAQ page on its website.
A significant financial hardship means:
An importer will be eligible for this temporary relief without filing documentation with CBP, provided the importer has sufficient record to support the significant financial hardship described above. While the documentation is not required at importation, CBP can ensure compliance by conducting a review of this documentation at a future date.
This temporary relief only applies to non-deposited duties, taxes, and fees on formal entries for consumption in March 2020 or April 2020. This includes formal entries of merchandise entered, or withdrawn from warehouse, for consumption, as well as entries for consumption from a Foreign Trade Zone.
However, this relief does not apply to any entry that includes any merchandise subject to one or more of the following:
Importers must ensure that their entries do not include merchandise that is ineligible for the relief prior to deferring duties. For example, if an entry includes the following two goods – (1) an ineligible good subject to antidumping duties; and (2) an eligible good only subject to MFN duties – the entire entry will be ineligible for the relief.
However, for entries that include both eligible and ineligible merchandise, CBP has authorized a submission of separate entries pursuant to 19 CFR 141.52 so that the eligible merchandise can receive this relief. Going forward, based on this authorization, a shipment with both eligible and ineligible merchandise can be filed as two separate entries:
This authorization to separate entries only applies to entries that have not been filed yet, and thus does not apply to any entries that have been previously filed.
CBP indicates that MFN duties and other charges on products that the US Trade Representative (USTR) has excluded from Section 301 duties are eligible for the deferral as long as the exclusion is in effect at the time of entry.
CBP is encouraging importers to take advantage of Automated Clearinghouse (ACH) for electronic payments, though postponed payment of an entry summary without penalty is still available via single-pay check, ACH Daily and Monthly Statement, or Periodic Monthly Statement (PMS).
Eligible importers that take advantage of this temporary relief have the responsibility to schedule the postponed payments, and should note that CBP will not adjust any statement dates. Guidance on scheduling this 90-day postponement period has been provided as follows:
Original Due Date
April 30, 2020
July 29, 2020
3 Month Postponement
April 29, 2020
May 14, 2020
August 14, 2020
April 21, 2020
July 22, 2020
May 21, 2020
August 21, 2020
Additional payment instructions for this temporary relief related to importers’ duty payment methods including Periodic Monthly Statement (PMS) and ACH Daily Statements is available at CSMS message #42421561 and CSMS message #42423171.
Requirements for this temporary relief continue to evolve and are subject to public comments that may modify CBP’s temporary final rule. Arent Fox will continue to monitor developments and can help companies determine if they are eligible for duty deferral in these increasingly challenging times.