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Treasury and CBP Temporary Rule on 90-Day Deferment for Payment of Certain Duties

On April 19, 2020, the Treasury Department in conjunction with Customs and Border Protection (CBP) released a temporary interim final rule (“Rule”) to provide importers that meet the qualifying criteria with the option of a 90-day deferment period on the payment of duties, taxes, and fees for goods coming into the U.S. in March and April.  Similar to other COVID-19-related rules, the Rule became effective immediately.

The Rule postpones for 90-days the deposit of certain estimated duties, taxes, and fees that an importer of record would ordinarily be obligated to pay as of the date of entry.  The temporary postponement applies only to entries made on or after March 1, 2020, through April 30, 2020.

To Qualify, Importers Must Demonstrate a “Significant Financial Hardship”

In order to qualify for the deferral, an importer must demonstrate that it has suffered a “significant financial hardship”, which is defined as follows:

  • The importer’s operations must have been fully or partially suspended during March or April 2020 as a result of local, state, and federal COVID-19 orders; and
  • Gross receipts for March 13-31, 2020 or April 2020 must be less than 60 percent of the gross receipts for the comparable period in 2019.

Given that almost every state, including local governments, have issued large sweeping orders that have suspended business operations, especially those deemed “nonessential,” many importers will likely be able to satisfy the first criterion of financial hardship.  Although CBP is not requiring the submission of documentation of eligibility, it advises that importers maintain such documentation as part of their books and records.

The Rule Does Not Cover AD/CVD duties or Sections 201, 232, and 301 Tariffs

The 90-day deferment will not apply to additional duties imposed pursuant to enforcement actions, including antidumping, countervailing, Section 201 (i.e., solar imports), Section 301 (i.e., imports from China) and Section 232 (i.e., steel and aluminum imports) duties.  Accordingly, collection of those duties and tariffs remain as scheduled.  (Please see our blog post here regarding exclusions on Section 301 tariffs to address COVID-19.)  Under the Rule, importers may file two separate entries when a shipment contains merchandise that is eligible for the temporary postponement and merchandise that is not.

It should be noted that the new Rule only provides for a temporary delay in payment.  Nonetheless, the Rule states that no interest will accrue on the unpaid amounts during the 90-day deferral period.

CBP is accepting comments on the preliminary Rule through May 20.