On 19 April, President Trump issued an Executive Order providing for a temporary 90‑day deferral, of estimated payments of duties, taxes, and fees to Customs and Border Protection (CBP) by importers “suffering significant financial hardship” due to the coronavirus pandemic. The deferral solely applies to most-favored nation (MFN) tariffs and duties and explicitly does not cover antidumping and countervailing duties, the Section 301 China tariffs, and safeguard tariffs. CBP issued guidance on the Executive Order through its Cargo Messaging Service on 19 April and a Temporary Final Rule is scheduled to be published in the Federal Register on 22 April. Any comments on the Temporary Final Rule must be received by 20 May, 2020.
The Executive Order applies to deposits of future entries of merchandise entered or withdrawn from the warehouse for consumption in March or April 2020. CBP will not return deposits of duties, taxes, and fees that have already been paid. Additionally, CBP has clarified that no interest will accrue on the postponed payments.
“Significant Financial Hardship”
The Executive Order states that only importers who suffer “significant financial hardship” due to the virus may take advantage of the 90-day postponement. CBP explains that “significant financial hardship” to an importer means the following:
“fully or partially suspended during March 2020 or April 2020 due to orders from a competent governmental authority limiting commerce, travel, or group meetings due to 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.”
An eligible importer is not required to file documentation with CBP to obtain a postponement of its estimated duties, taxes, and fees, but must maintain records establishing that it meets the requirements for relief as CBP may conduct a future review to ensure compliance.
Exclusions to the 90-day Postponement
The 90-day grace period only applies to merchandise subject to MFN duties or tariffs. It does not apply to entries of any merchandise subject to the following:
- Antidumping duties;
- Countervailing duties;
- Duties assessed pursuant to Section 232 of the Trade Expansion Act of 1962;
- Duties assess pursuant to Section 201 of the Trade Act of 1974; and
- Duties assessed pursuant to Section 301 of the Trade Act of 1974.
CBP has authorized the submission of separate entries for shipments including both merchandise subject to and not subject to the above exclusions.
The Executive Order prescribes the following with respect to payments by importers:
- Estimated duties, taxes, and fees paid on single pay basis or Daily Statement may be postponed up to 90 days from the payment date. For example, if the original due date was 30 April, 2020, an importer may defer payment until 29 July, 2020.
- Estimated Internal Revenue Tax may be postponed up to three (3) months. For example, if the original due date was 30 April, 2020 the importer has until 30 July, 2020 to make payment.
- Estimated duties and fees paid via Periodic Monthly Statement (PMS) may be postponed up to the three (3) months, as defined by the 15th working day of the third month. For example, if the original due date was 21 April, 2020, the importer has until 22 July, 2020 to make payment through PMS.
Finally, CBP will not adjust statement dates and has instructed importers to schedule their payments in order to take advantage of the 90-day postponement. Any adjustments to the April PMS must be made prior to 11:49pm ET on Monday, 20 April, 2020. CBP intends to update the ACE SU statement transaction to give the importer the ability to remove entries from a PMS as of 19 April.