Proposed Rules for TFTEA Drawback Posted by CBP

CBP posted its proposed rulemaking on drawback regulations under the Trade Facilitation and Trade Enforcement Act. The 444 pages of proposed rules are scheduled for publication in the Federal Register on Aug. 2, with comments due 45 days after that. Among the contentious issues involved was how the rules would treat distilled spirits in terms of substitution drawback (see 1708090043).

The long-awaited rulemaking had been held up for months while the Treasury Department and the Office of Management and Budget reviewed its provisions. The proposal addresses a wide range of issues. Among other things, CBP said the notice "explains how filings during the transition period will work, discusses the interim policy guidance procedures for filing claims prior to these regulations becoming final, and proposes to make TFTEA-related changes, dealing with bonds, regarding joint and several liability for the importer of the goods and the drawback claimant, and technical corrections and conforming changes to CBP regulations."

CBP also seeks to resolve a long-standing issue related to drawback filing related to excise taxes. "This proposed rule would protect the integrity of excise tax revenue collections by ensuring that 19 U.S.C. 1313(j)(2) substitution drawback is not employed to evade the statutory prohibition on using a single exportation as the basis for two drawback claims," CBP said. "It would preclude the filing of substitution drawback claims for excise tax paid on imported merchandise in situations where no excise tax was paid upon the substituted merchandise or limit the amount of drawback allowable to the amount of taxes paid (and not returned by refund, credit or drawback) on the substituted merchandise, and thus eliminate double drawback."

A Court of International Trade judge on June 29 ruled that the government missed a statutory deadline for issuing the regulations as part of a lawsuit over whether CBP is improperly not processing requests for accelerated payment. CIT said it would consider ordering its own deadline if the agency didn't comply quickly (see 1806290028). Lawmakers also recently called on the agencies to quickly move forward with the regulatory proposal (see 1807200025).