Final regulations: Drawback claims, rule changes

The U.S. Treasury Department and U.S. Customs and Border Protection (CBP) today jointly released for publication in the Federal Register final regulations implementing changes to the drawback rules.

The final regulations [PDF 2.33 MB] provide in 498 pages new processes for drawback claims pursuant to the Trade Facilitation and Trade Enforcement Act of 2015 (TFTEA) that:

• Liberalize the merchandise substitution standard
• Simplify recordkeeping requirements
• Extend and standardize timelines for filing drawback claims
• Require the electronic filing of drawback claims

The final regulations also provide details with respect to the process required to perfect claims filed under CBP’s interim guidance procedures, and clarify the rules on prohibition of filing of a substitution drawback claim for excise tax in situations when no excise tax was paid upon the substituted merchandise.

In a related release, CBP reported that it is returning certain TFTEA drawback claims to trade control in anticipation that these claims will be resubmitted with a request for accelerated payment. Read CSMS #18-000737

KPMG observation 

The final regulations bring to light that the long-awaited accelerated payment process for TFTEA claims will be available.  Companies that have not yet updated their privilege applications for TFTEA or assessed the sufficiency of their drawback bond amounts, need to consider evaluating their drawback programs right away. For claimants that have already submitted claims under TFTEA and wish to get accelerated payments on these claims, they will need to “perfect” these claims for accelerated payment. 

The final regulations depart from the interim regulations in that CBP will allow mixed TFTEA and non-TFTEA substitution drawback claims (“mixed claims”). Companies that previously filed claims under the prior regulations covering partial imports on an entry need to evaluate how much of those remaining imports on the same import entry can be filed under the TFTEA rules.

For more information on this topic or to learn more about KPMG’s Trade & Customs Services, contact:

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