05.12.2020 Payment of Deferred Import Duties, Taxes and Fees By: Rosanne Jacuzzi

As a follow-up to our client alert of April 23, 2020, here we provide: (i) a reminder of the opportunity for eligible importers to defer certain import duties, taxes and fees; and (ii) provide additional guidance on the timely payment of such deferred amounts.

Background.  By Executive Order, President Trump authorized a temporary extension of the deadline for the payment of deposits of certain estimated import duties, taxes and fees for importers suffering “significant financial hardship due to COVID-19.”  That postponement applies to formal entries of merchandise entered for consumption in March 2020 or April 2020, exclusive of antidumping duties, countervailing duties and duties assessed pursuant to Section 232 of the Trade Expansion Act of 1962 and the duties assessed pursuant to Sections 201 and 301 of the Trade Act of 1974.  The deferral, however, does not apply to other debts that may be due U.S. Customs and Border Protection (CBP).

An importer is considered to have suffered “significant financial hardship,” and is thus eligible for the deferral of payments, if: (i) the importer’s operation is 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 (ii) as a result of such suspension, the importer’s gross receipts for March 13-31, 2020 or April 2020 are less than 60% of the gross receipts for the comparable period in 2019. Further, the importer must maintain documentation that demonstrates it meets the requirements for relief as part of its books and records and be prepared to provide the documentation to CBP if requested.

Payment of Deferred Amounts.  For those importers that meet the requirements for the deferral of duties, taxes and fees, and have documentation to support qualification for the deferral, payment can be deferred for 90 calendar days from their original due date.  That is:

  • Importers that make payments on a single pay or Daily Statement basis may submit payment of duties, taxes and fees within the 90-day postponement period.
    • For example, a single-pay entry summary with a payment due date of April 30, 2020 would be due on or before July 29, 2020 (the 90th day).
  • For importers paying through Periodic Monthly Statement (PMS) filings, allowing for the monthly payment of duties, taxes and fees for a given month by the 15th working day of the following month, deferred amounts would be due three-months from the original PMS due date (i.e., by the 15th working day of the third month).
    • For example, payment of PMS amounts due for the month of April 2020 that would originally be due on May 21, 2020 can be scheduled for payment on or before August 21, 2020 (the 15th working day of the third month).
  • Estimated Internal Revenue Tax collected by CBP at the time of import, such as the Federal Excise Tax assessed on the import of wine, beer and distilled spirits, may also be deferred in accordance with the above guidance.

Importers who choose to take advantage of the deferral period for the deposit of estimated duties, taxes and fees have the responsibility to schedule payments accordingly.  CPB encourages importers/filers to take advantage of Automated Clearinghouse (ACH) for electronic payment of amounts due.  CBP has provided filing guidance for ACH Daily Statement and ACH Debit and Credit PMS filers, advising how these filers should schedule payments and submit entries. The process requires an attention to the detail provided in CBP’s notice, Payment Instructions for 90-Day Postponement of Payment for the Deposit of Certain Estimated Duties, Taxes, and Fees, available here.

No interest, liquidated damages claim or other sanctions will be imposed on the delayed deposit of estimated duties, taxes, and fees made in accordance with the guidance provided by CBP.  However, interest will accrue from such due date if payment is not timely made.

Watch for further updates on the opportunity to postpone the payment of certain duties, taxes and fees.  Trade associations and importers are encouraging CBP to extend the deferral period and make other modifications to the deferral process, to help alleviate the cash flow challenges faced by importers.  We will keep you apprised of any developments. 

Please note: This alert contains general, condensed summaries of actual legal matters, statutes and opinions for information purposes. It is not meant to be and should not be construed as legal advice. Readers with particular needs on specific issues should retain the services of competent counsel. 

Please click here for additional legal updates from Williams Mullen regarding COVID-19.