Anthony Nogueras: "TFTEA Drawback Update: Customs May Suspend Accelerated Payment of Drawback Claims Filed Under TFTEA"
Unfortunately for the drawback trade community, the transition from the existing drawback program to the new regime required by the passage of The Trade Facilitation and Enforcement Act of 2016 threatens to disrupt payment of drawback claims starting February 24th of this year, the new law’s official effective date.
The passage of new statute requires changes to the more detailed regulatory structure as well as adjustment of internal administrative procedures. Given the deadline date of February 24, 2018, the trade community expected the proposed rule-making to be formally published in the Federal Register long before now to allow ample time for public comment and dialogue between the trade community and Customs prior to finalization of the rule making. Unfortunately, CBP has indicated that payment of drawback claims under the “accelerated” program maybe be suspended if the new regulatory structure is not finalized by the new law’s effective date…now a forgone conclusion.
Please note that claimants filing under the existing law (you can do so for a year) should not see a delay in the payment of claims. NAFTA drawback claimants (those exporting primary to CA and MX) as an example will continue to file under the existing law. There are also numerous other claimants that will not benefit under the new law if most of their classifications fall into an “Other” catch all classification at the eighth and tenth digits.
Further complicating the implementation of the new law is the transition of drawback filing from ACS (the existing electronic platform for the automated submission of drawback claims) to ACE. The initial plan involved a two-staged transition from ACS to ACE. The first phase required the programming to accept fully automated drawback submissions in ACE consistent with the existing law.
TFTEA drawback claims under the new law required additional programming to accommodate the new laws distinct provisions. For example, the current law’s drawback time requirement allows for three years from the date of export to the submission of a drawback claim to Customs. The new law does not include a time requirement related to the export (other than it needs to occur after the import date) but rather simplifies the time frames by allowing for submission of a claim a maximum of 5 years from the date of importation.
The initial transition to ACE was scheduled initially for late 2016. The date was pushed on multiple occasions until Customs decided to dispense with the initial ACE rollout and simply establish February 24th as the implementation date for both legacy drawback and TFTEA electronic claim submission in ACE. The obvious problem…how can CPB execute programming for TFTEA claims without knowing the final rules?
Between the delayed publication regulations, the possibility of suspension of the payment of drawback claims, and programming challenges with ACE, expect a messy transition to the new regime. The moral of the story for existing drawback claimants…file as much as possible between now and February 24th.