Effective 20 April 2020, the government has introduced a temporary 90-day postponement of certain import payment deadlines for companies and individuals experiencing significant financial hardship due to the economic fallout from the COVID-19 pandemic.
On 19 April 2020 the US Treasury Department and US Customs and Border Protection (CBP) released a temporary final rule, which provides that such importers may defer payment of most non-deposited estimated most-favoured nation (MFN) duties, taxes and fees on formal consumption entries without penalty or interest. MFN duties do not include anti-dumping or countervailing duties or duties resulting from Section 201, 232 or 301 tariffs.
Because these charges are ordinarily due upon entry, the deferral provides temporary cash-flow relief for US importers facing financial distress and liquidity concerns. President Trump signed an executive order authorising these deferrals pursuant to his earlier proclamation designating the COVID-19 pandemic as a national emergency.
The announcement follows a previously abandoned CBP action to provide relief, intense lobbying on both sides of the issue and mixed signals from the Trump administration. In March 2020 CBP begun accepting case-by-case requests to defer import payments only to backtrack days later.
The CBP guidance (CSMS 42421561 and CSMS 42423171) summarised below:
- defines 'significant financial hardship';
- outlines the charges eligible for deferral; and
- sets out payment instructions and timeframes.
On 20 April 2020 CBP also published a FAQ page on its website.
Significant financial hardship
A 'significant financial hardship' means a full or partial suspension of the importer's business operation during March 2020 or April 2020 due to a government order concerning COVID-19 where such suspension results in gross receipts between 13 March 2020 and 30 April 2020 equalling less than 60% of the gross receipts for a comparable period in 2019. 'Gross receipts' are defined at 26 CFR 1.993-6.
An importer will be eligible for this temporary relief without filing documentation with CBP, provided that the importer has sufficient records to support the significant financial hardship described above. While the documentation is not required at importation, CBP can ensure compliance by conducting a review of this documentation at a future date.
Entries not eligible for 90-day postponement
This temporary relief applies only to non-deposited duties, taxes and fees on formal entries for consumption in March 2020 or April 2020. This includes formal entries of merchandise entered, or withdrawn from a warehouse, for consumption, as well as entries for consumption from a foreign trade zone.
However, this relief does not apply to entries that include any merchandise subject to one or more of the following:
- anti-dumping or countervailing duties;
- Section 201 duties pursuant to the Trade Act 1974;
- Section 232 duties pursuant to the Trade Expansion Act 1962; and
- Section 301 duties pursuant to the Trade Act.
Importers must ensure that their entries do not include merchandise that is ineligible for the relief prior to deferring duties. For example, if an entry includes an ineligible good subject to anti-dumping duties and an eligible good subject only to MFN duties, the entire entry will be ineligible for the relief.
However, for entries that include both eligible and ineligible merchandise, CBP has authorised a submission of separate entries pursuant to 19 CFR 141.52 so that the eligible merchandise can receive this relief. Going forward, based on this authorisation, a shipment with both eligible and ineligible merchandise can be filed as two separate entries:
- an entry with the ineligible merchandise (eg, subject to anti-dumping duties) that cannot receive this temporary relief; and
- an entry with the eligible merchandise (eg, subject only to MFN duties) that receives this temporary relief.
This authorisation to separate entries applies only to entries that have yet to be filed and thus does not apply to entries that have previously been filed.
CBP has indicated that MFN duties and other charges on products that the US Trade Representative has excluded from Section 301 duties are eligible for the deferral as long as the exclusion is in effect at the time of entry.
Payment instructions and timeframes
CBP is encouraging importers to take advantage of the automated clearinghouse (ACH) for electronic payments, although postponed payment of an entry summary without penalty is still available via single-pay basis, ACH daily and monthly statement or periodic monthly statement (PMS).
Eligible importers that take advantage of this temporary relief have the responsibility to schedule the postponed payments and should note that CBP will not adjust any statement dates. Guidance on scheduling this 90-day postponement period has been provided as follows:
- Estimated duties, taxes and fees paid on a single-pay basis or daily statement may be postponed up to 90 days from the payment due date (eg, if the original due date is 30 April 2020, this can be postponed up to 29 July 2020).
- Estimated internal revenue tax paid via deferred tax schedule may be postponed up to three months from the payment due date (eg, if the original due date is 29 April 2020, the new due date may be 14 May 2020, 29 July 2020 or 14 August 2020).
- Estimated duties and fees paid via PMS may be postponed up to three months, as defined by the 15th working day of the third month (eg, if the original due date is 21 April 2020, the new due date may be 22 July 2020, 21 May 2020 or 21 August 2020).
Additional payment instructions for this temporary relief relating to importers' duty payment methods (including PMS and ACH daily statements) is available in CSMS message #42421561 and CSMS message #42423171.
The requirements for this temporary relief continue to evolve and are subject to public comments that may modify CBP's temporary final rule.
