Banking and Financial Services Sections

Are You Overpaying Import Tariffs?

Measure Entitles Businesses to Reimbursement


Michael A. Fenton

Michael A. Fenton

Does your business import products from a foreign country? If so, you may be eligible for reimbursement of some or all of the import duties you paid over the last three years. In some cases this can equate to hundreds of thousands of dollars in refunds.

Swift action is required because the deadline to apply for reimbursement is Dec. 28. What follows is some detailed advice on what to do.

Through a trade program known as the Gen-eralized System of Preferences (GSP), the U.S. promotes economic growth in the developing world by providing preferential duty-free entry for up to 4,800 products from 129 designated beneficiary countries and territories. The GSP was instituted on Jan. 1, 1976, by the Trade Act of 1974 and has continued in various forms since its enactment.

As with other legislation, Congress often allows the GSP authority to lapse before it is renewed. This causes duties on imports that are normally covered by the GSP to be charged at the applicable port of entry. Said duties are held in escrow pending renewal of the GSP. Once the GSP is re-authorized, duties held in escrow can be retrieved by importers who paid them on GSP products during the period in which the GSP lapsed.

However, if any item’s GSP status changes, thereby losing eligibility for duty-free treatment, the duties held in escrow will not be refunded to the importer.

Most recently, the GSP expired on July 31, 2013, causing companies all the U.S. to be charged tariffs on imports that previously entered the United States without such fees. The lapse of the GSP continued until June 29, 2015 when President Obama signed into law a bill (H.R. 1295) which reauthorized the GSP retroactively to July 31, 2013. This enables importers of GSP-eligible products to seek reimbursement for tariffs paid during the lapse in GSP coverage. The GSP reauthorization provided retroactive benefits only for goods from a country that is a beneficiary of the GSP program as of July 29, 2015. As such, this would exclude countries such as Bangladesh and Russia that lost eligibility between July 31, 2013 and July 29, 2015.

If your business imported products from a foreign country between July 31, 2012 and June 29, 2015 effective legal counsel can help you determine your reimbursement eligibility and navigate the process of seeking a refund.

Importers who filed their entries electronically, used the appropriate special program indicator for GSP, and paid duty on GSP-eligible goods, will receive an automatic refund. However, many entries were made without using the special program indicator for GSP refunds. Unfortunately, many local importers use couriers that did not properly claim eligible GSP products at the time of entry. Many couriers did not claim products as having GSP status at the time of entry because the GSP legislation was expired. Because the products were not claimed at GSP at the time of entry, a formal request must be made of US Customs and Border Protection for a refund of the tariffs.

A refund request for duties deposited must be received by U.S. Customs and Border Protection no later than Dec. 28. There are very specific requirements for processing these requests and our office has experience in handling these claims. Typically, the only documentation needed to determine eligibility and process any applicable refunds can be found on a statement of the transaction from your courier (e.g. FedEx, UPS, etc.)

These tariff refunds represent thousands of dollars to many area business, but swift action is required to receive the reimbursements. If you have questions about GSP reauthorization and whether your company is entitled to a refund contact qualified legal counsel immediately.

Attorney Michael A. Fenton, of Shatz, Schwartz and Fentin, P.C., concentrates his practice in the areas of business planning, commercial real estate, estate planning and elder law; [email protected]; (413) 737-1131.