CBP to Allow 90-Day Deferrals for Some Customs Duty Collections; Changes to PMS Due April 20

President Donald Trump authorized the temporary extension of “deadlines, for importers suffering significant financial hardship because of COVID-19,” in an April 19 Executive Order. “To qualify for this temporary postponement, an importer must demonstrate a significant financial hardship,” CBP said in a prepublication version of a temporary final rule. While the CBP notice limits the deferrals to March and April payments, the EO gives the Treasury secretary broad authority to postpone duty collections during the COVID-19 national emergency.

To be eligible for the deferrals, an "importer’s 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," it said.

Importers "need not file additional documentation with 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," it said. Due to the financial hardship limitations the National Customs Brokers & Forwarders Association of America advised that "before removing entries from Statement, members may wish to consider obtaining support from their customers for the duty postponement." Such a statement should include language saying that "I confirm that my company satisfies this requirement and I understand that I may be required to submit proof of our qualification to CBP," the NCBFAA said in an April 20 email.

CBP held a conference call on April 20 with industry to go over the postponed payments, the NCBFAA said in a separate email. "There have been questions regarding eligibility where the broker is playing a significant role in the transaction, either as the Importer of Record (IOR) or by submitting payment on behalf of their client. CBP stated that it comes down to the IOR number on the entry summary," the NCBFAA said. "The agency noted the IOR number on the entry summary is the legal entity and that party has the legal claim to the postponement. As for questions regarding exclusions for Section 301, CBP said that they will be eligible as long as the exclusion covers everything on the entry summary. It must be a clean exclusion that covers the entire entry."

CBP said in a CSMS message that "[t]his temporary postponement applies to formal entries of merchandise entered, or withdrawn from warehouse, for consumption (including entries for consumption from a Foreign Trade Zone) in March or April 2020," and that "CBP will not return deposits of estimated duties, taxes, and fees that have already been paid."

Any adjustments to the April periodic monthly statement (PMS) to take advantage of the deferral "must be made prior to 11:59 PM eastern time on Monday, April 20, 2020," CBP said. That means "[t]oday is the last day to defer monthly payments due today," law firm Sandler Travis said on its website. "Any importers making payment via the April periodic monthly statement must work with their filers today to ensure eligible entries are pulled from statement prior to 11:59 p.m. EDT on Monday, April 20." CBP said during the conference call that filers also have until midnight tonight to pull back an already authorized statement, according to the NCBFAA.

The temporary rule "includes a waiver of the regulatory requirement to deposit estimated duties, taxes, and fees for the purpose of establishing the time of entry in those instances where it would otherwise be required," it said. CBP also outlined the delay in two CSMS messages (see 2004190001). The delayed collection won't apply to entries with goods subject to antidumping/countervailing duties or Sections 301, 232 or 201 trade remedies, CBP said in another CSMS message. "No interest will accrue for the postponed payment of such estimated duties, taxes, and fees during this 90-day postponement period," it said. "No penalty, liquidated damages, or other sanction will be imposed for the postponed payment of the deposit of estimated duties, taxes, and fees in accordance with this temporary postponement."

The deferrals also don't "apply to deadlines for the payment of other debts to 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 due to CBP," it said.

Even the Column 1 duties on goods subject to the trade remedies are not eligible for deferrals, a CBP spokeswoman said. “Maybe that makes it easier for CBP to administer, but it leaves many, many importers -- including apparel importers that pay some of the highest Column 1 duties -- completely out in the cold,” said customs lawyer Brenda Jacobs of Jacobs Global Trade & Compliance.

Although goods subject to AD/CV duties or Sections 301, 232 or 201 trade remedies aren't eligible for deferred payments, "CBP has, however, authorized importers to split shipments into separate entries," Sidley Austin lawyer Ted Murphy said in a blog post. That means "if a shipment contains merchandise subject to Section 301 duties, for example, and merchandise that is not, the shipment can be filed as two separate entries."

Industry was generally welcoming of the flexibility, but some wished the administration had gone further. "While every little bit can help in this crazy time, one wonders how much of a help this will really be," Murphy said. "Of the ~$72 billion the United States collected in duties in FY19, about half of that amount was attributable to section 201, 232, 301, AD/CV duties. We will see." Also potentially blunting the "usefulness of this apparent effort to be helpful" is the lack of refunds for duties already deposited, Barnes Richardson lawyer Larry Friedman said in a blog post. "That means this whole thing might be useful for the next 10 days and for companies on periodic monthly statements."