CBP Can't Refund Wine Excise Taxes Collected Due to ACE Processing Error, Agency Says

CBP can’t refund excise taxes mistakenly assessed on a wine importer as a result of an ACE processing error, the agency said in a ruling issued in 2019 but only publicly released on its ruling database Jan. 31, 2021. Despite the double assessment of excise tax having resulted from its own error, CBP held that its regulations only provide for refunds of excise taxes under certain circumstances, none of which apply to this particular situation. Instead, the importer must apply directly to the Alcohol and Tobacco Tax and Trade Bureau, CBP said in HQ H294599.

AW Direct sought the refund on an entry of bulk red wine it imported from Australia in 2016. At the time of entry, the bulk wine was declared as “tax deferred” on the entry summary, but as a result of the ACE processing error the taxes were assessed at time of entry. As the excise taxes were also assessed when the bulk wine was bottled and shipped from AW Direct’s bonded facility, the CBP processing error meant that the importer was charged for the excise tax twice.

CBP San Francisco, which handled the entry and AW Direct’s subsequent protest, said it had no authority to issue a refund. Though claims for refunds are usually filed with TTB, CBP’s regulations at 19 CFR 24.36(d) do lay out certain circumstances under which CBP can refund internal revenue (IR) taxes. One of those authorities allows CBP to issue refunds when there’s a mathematical or computation error in either the quantity of the imported article or the amount due. CBP said that a computation error would be the only one of its refund authorities that could possibly apply to AW Direct.

CBP headquarters agreed with the port, finding that none of its refund authorities applied to AW Direct’s circumstance. “The alleged incorrect assessment of IR taxes does not involve an error based on the computation of the quantity of the imported article or a mathematical error in computation of the tax due, as required,” CBP said. “[AW Direct] does not assert that the amount of IR taxes CBP assessed was in error, but that the timing of the assessment was in error.”

But while CBP does not have the authority to issue a refund, it can help the importer apply for a refund directly with the TTB, the ruling said. Under 19 CR 24.26(e), CBP may “assist the importer in pursuing a refund from TTB by providing proof of the entry and payment of internal revenue tax deposited via the procedure outlined in the regulation,” CBP said. “The notice of refund provided and the statement issued by CBP (upon request) must be filed directly with the Director of the National Revenue Center of TTB along with the claim filed on the TTB Form 5620.8.”