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CBP’s Duty Relief Short-Lived as Importers Warned to Pay Up

The duty relief offered by the federal government on imports last week was short-lived.

U.S. Customs and Border Protection (CBP) on March 20 had issued a notification requesting case-by-case need for additional days for payment of estimated duties, taxes and fees “in an effort to work with the trade community through the national emergency challenges resulting from the COVID-19 pandemic.

On Thursday, CBP notified the trade community that it is no longer accepting requests for additional days for payment and provided guidance to brokers and importers on processing the entries. CBP said it will retain the right to allow additional days for narrow circumstances, including a physical inability to file entry or payments, due to technology outages or port closures.

The agency said single payments, daily and periodic monthly statement payments of estimated duties, taxes and fees that should have been made from March 20 through March 26 must be initiated by March 27.

Estimated duties, taxes and fees payments should be initiated via FedWire or ACH credit. Although the temporary option was provided to extend payment due dates, if the money was withdrawn from the account, these funds are legally owed to CBP and a refund will not be issued, the agency said. Trade users need to work with their financial institutions to ensure that future ACH debit and ACH credit payments to CBP are processed appropriately.

CBP said it is continuing to work with federal and private sector partners to identify appropriate mechanisms to manage the operational impacts of COVID-19.

“We along with other trade stakeholders are seeking further clarification from CBP with respect to this issue and will keep you updated of any changes,” customs brokerage Alba Wheels Up told its customers.

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A lot of things are “still up in the air,” Alba president Salvatore J. Stile II told Sourcing Journal Thursday, noting it’s “too preliminary to know” why CBP rescinded the deferral request process just days after it launched.

“Importers are confused,” Stile added, and some in financial straits are likely to absorb a non-payment penalty rather than fork over the duties right away.

According to Stile, some soft goods and fashion retailers trapped in a “liquidity freeze” due directly to the coronavirus outbreak could elect to preserve their cash and risk non-payment, even if that means forgoing the “privilege” of being on CBP’s ACH program.

But “unless they’re in dire straits, my hunch is that most retailers will be paying the duty,” he said.

Wholesalers, he added, have been on the receiving end of myriad cancellations, clouding their financial picture. “A lot of retailers are holding back monies to their vendors and cancelling orders, so that has generated some flusher cash,” Stile said. “As an offset, they’d hopefully be able to pay the duties.”

On the other hand, vendors to the retail community are “holding onto their cash extremely cautiously,” he added.