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The United States Issues 90 Day Customs Duties
Deferral for Companies Experiencing Significant Financial Hardship Due to
COVID-19
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Ujczo,
Daniel D. Thelen, Bruce
C.

April
2020

Industry Alerts

The United States has imposed a 90 day deferral for the deposit of customs of
duties due March 1 – April 30,
2020 for companies experiencing significant financial hardship as a result of
COVID-19.  The deferral is temporary and limited to general customs
duties.  The deferral does not apply to special tariff measures such as the
“steel and aluminum tariffs” (Section 232) and the “China tariffs” (Section
301).

The April 18, 2020 “Executive Order on National Emergency Authority to
Temporarily Extend Deadlines for Certain Estimated Payments” (available at https://www.whitehouse.gov/presidential-actions/executive-order-national-emergency-authority-temporarily-extend-deadlines-certain-estimated-payments/)
and the April 19, 2020 “Temporary Final Rule issued by U.S. Customs and Border
Protection (US-CBP) and the Secretary of Treasury” (available at https://www.cbp.gov/sites/default/files/assets/documents/2020-Apr/Temporary-Postponement-of-Payment-Period%20for-DTF-20-4-2020-1.pdf),
establishes the following eligibility requirements, procedures, and
restrictions:

Significant Financial Hardship: A
company seeking the deferral must demonstrate that its “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.”  The company need not file additional
documentation with US-CBP to be eligible for this relief “but must maintain
documentation as part of its books and records establishing that it meets the
requirements for relief.”

Deferral of Payments and Interest for March and April
2020: The relief is a deferral as opposed to a
suspension, meaning that the customs duties will need to be paid at least 90
days from the required date of deposit.  The process “temporarily
postpones the deadline for importers of record to deposit certain estimated
duties, taxes, and fees that they would ordinarily 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 but for this emergency
action.”  In addition, no interest that would otherwise accrue upon such
estimated duties, taxes, and fees will accrue during the 90-day postponement
period.

No Refunds if Previously Deposited:
The temporary postponement does not permit the return of any deposits of
estimated duties, taxes, and/or fees that have been paid.  As most
companies pay the deposits within 10 days of entry, the most likely benefit
will be for those deposits due in April 2020.

Does Not Apply to Special or Extraordinary
Tariff Measures: This temporary
postponement also does not apply to any entry, or withdrawal from warehouse,
for consumption, or any deposit of estimated duties, taxes, or fees for the
entry, or withdrawal from warehouse, for consumption, where the entry summary
includes any merchandise subject to one or more of the following:

AD/CVD—antidumping duties (assessed pursuant to 19 U.S.C. 1673 et
seq.) and countervailing duties (assessed pursuant to 19 U.S.C. 1671 et
seq.)

National Security Tariffs (e.g., steel and aluminum
tariffs)—duties assessed pursuant to Section 232 of the Trade Expansion Act
of 1962 (19 U.S.C. 1862)

Safeguards—duties assessed pursuant to Section 201 of the Trade
Act of 1974 (19 U.S.C. 2251 et seq.)

“China Tariffs” —duties assessed pursuant to Section 301 of the
Trade Act of 1974 (19 U.S.C. 2411 et seq.)

Does Not Apply to Any Other Debts and Payments Due to
US-CBP:  The temporary postponement does not apply
to deadlines for the payment of other debts to US-CBP, including but not
limited to deadlines for the payment of bills for duties, taxes, fees, and
interest determined to be due upon liquidation or reliquidation, deadlines for
the payment of fees authorized pursuant to 19 U.S.C. 58c (except for
merchandise processing fees and dutiable mail fees), or deadlines for the
payment of any penalty or liquidated damages.

The intent of the duty deferral is to provide companies with liquidity during
the initial phases of COVID-19 while maintaining the strong enforcement policies
regarding China and other countries.  Given the eligibility requirements,
durational elements, and exclusions, companies seeking to utilize the deferral
should exercise caution and consult counsel as needed.  Additionally,
companies may desire to develop a whole-of-supply chain strategy as other
counties (e.g., Canada) have implemented similar customs duty deferral policies.
Susan Benedict is available to assist on all customs matters in order to
ensure business recovery, resumption, and resiliency.

Related Services

International/Regions

Contacts

Bruce
Thelen

Member
Detroit

T:313-223-3624

E:[email-masked]

Daniel
Ujczo

Of Counsel
and Cross Border (Canada - U.S.) Practice Group Chair
Columbus

T:614-744-2579

E:[email-masked]

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