Importers who aren't signed up for electronic payments won't get their refunds, and CBP has said importers must request refunds through a new online portal and opt in to an existing system to receive electronic payments.
The Trump administration is flagging an issue that it says could delay refunds of about $166 billion in tariffs that were overturned by the US Supreme Court earlier this year.
Customs and Border Protection said in a Tuesday filing at the Court of International Trade that it is nearing completion of an automated process to issue refunds to importers that paid the tariffs. But it said only about 20% of roughly 300,000 eligible firms have taken a crucial step to receive their money.
CBP flagged the issue in a court-ordered update to Judge Richard Eaton, who is overseeing the government's massive refund effort. Eaton on Tuesday held a hearing on the matter that was closed to the public.
Importers who aren't signed up for electronic payments won't get their refunds, CBP official Brandon Lord said in the filing. The agency has said importers must request refunds through a new online portal, and then they need to opt in to an existing system to receive an electronic payments and only 57,000 have so far done that, Lord said.
"CBP continues to issue messaging to the trade community regarding this new requirement and to provide information about how to complete the process to receive electronic refunds," Lord, an executive director at CBP, said in the filing in Manhattan.
In a 6-3 decision, the Supreme Court found on Feb. 20 that Trump unlawfully used the International Emergency Economic Powers Act, or IEEPA, to impose tariffs on goods entering the country. Since then questions have swirled around when and how importers may get refunded, even as a fresh legal battle has emerged over a new set of tariffs Trump issued under a different law after his Supreme Court loss.
Lord said in a previous filing that IEEPA refund requests from importers who have not signed up for electronic payments will be rejected.
About 82% of importers who paid IEEPA duties are eligible for electronic refunds, representing about $127 billion of the total tariffs that were paid under the emergency law, according to the CBP filing.
CBP previously said the system under development is called the Consolidated Administration and Processing of Entries, or CAPE. It's intended to be largely automated once a claim is made and is being designed to issue consolidated refunds to importers.
Before the new process was announced, Eaton expressed concern at a court hearing about any plan to issue refunds that requires importers to request their money back rather than have it automatically sent back by the government based on the existing data.
The new process, if it takes effect, will impact hundreds of thousands of US importers with tens of millions of IEEPA tariff payments. It's unclear if Eaton could request or order any changes, or if the plan may face challenges from importers. Any disagreement could lead to a new wave of appeals.