IEEPA Tariff Refunds: FAQs for Importers

The government stopped collecting IEEPA-related tariffs on February 24. The U.S. Court of International Trade subsequently ordered refunds to importers of record but temporarily paused “immediate” refunds to allow U.S. Customs and Border Protection (CBP) to build an automated refund system. Refunds are expected to proceed through a centralized administrative process rather than manual, entry-by-entry action.

No. While the court made it clear refunds should be broadly available, CBP says importers will need to take affirmative steps through its Automated Commercial Environment (ACE). Refunds will be issued electronically only, and importers must be properly registered and configured to receive them.

CBP is building a new refund module within ACE called the Consolidated Administration and Processing of Entries (CAPE). CAPE is designed to process refunds in four stages:

1. Claim submission
2. Mass recalculation of duties without IEEPA tariffs
3. Liquidation or reliquidation review
4. Electronic refund issuance

CBP says different system components are being deployed in phases.

CBP told the Court of International Trade it expects core refund functionality in the coming weeks, although refunds may roll out in stages and could extend over several months. Importers shouldn’t expect immediate payment once the system goes live.

Eligibility depends on the entry’s liquidation status. Unliquidated entries and liquidated but not-final entries are expected to be covered by the administrative refund process. Fully and finally liquidated entries may require protests or litigation to preserve refund rights, depending on timing and procedural posture.

What you think you owe may be different from what CBP thinks you owe. Importers — as the importer of record — are responsible for the initial determination of duties paid on an estimated basis when goods enter the United States. CBP subsequently reviews the entry, including tariff classification, customs value, country of origin, and any applicable exclusions.

Liquidation is the point at which CBP makes its final determination of the duties, taxes, and fees owed on an import entry. Liquidation formally closes the entry unless a timely protest is filed, by confirming the final duty amount.

After liquidation, one of three things may occur:

• No additional duties are owed
• An overpayment results in a refund
• CBP assesses additional duties due

Once CBP liquidates an import entry, the importer has 180 days from the date of liquidation to file a formal protest challenging CBP’s decision. If no protest is filed within that 180-day period, CBP’s decision becomes final and legally binding.

CLA recommends importers work closely with their licensed customs brokers who handled the initial import documentation to monitor liquidation timelines and file protests related to IEEPA tariffs paid.

While liquidation commonly occurs approximately 314 days after the entry date, entries may liquidate earlier. As a result, importers should not rely solely on the 314-day benchmark and should instead track liquidation status through their ACE account.

Yes. The court ruled refunds of unlawfully collected IEEPA duties should include interest. Interest continues to accrue while refunds are delayed, which may materially increase the total recovery for some importers

Importers should:

• Confirm ACE portal access and enrollment in electronic (ACH) refunds
• Identify entries on which IEEPA tariffs were paid and confirm liquidation status
• Coordinate with customs brokers to compile entry-level data
• Closely monitor CBP and court updates

Failure to complete electronic refund setup may delay or prevent payment.

Expected tariff refunds generally represent gain contingencies and aren’t recorded until realization or realizability is established. However, companies may need to evaluate disclosure obligations if expected refunds are material. Timing mismatches between customs refunds and financial reporting periods may also affect earnings and cash-flow forecasts.

Often, yes. If IEEPA tariffs were previously deducted through cost of goods sold or capitalized into inventory, a refund generally results in taxable income when received.

The specific tax treatment depends on how the tariffs were originally treated for tax purposes and whether inventory has already been sold. Companies should model the timing impact, particularly where refunds are received in a different tax year than the original deduction.

If tariffs were included in inventory costs, a refund received after the inventory has been sold generally results in income rather than an adjustment to current-period cost of goods sold. If inventory remains on hand at the time of refund, an adjustment to inventory basis may be required. The facts and refund timing relative to inventory disposition are critical.

Yes. Many states conform to federal taxable income, meaning tariff refunds may also be taxable for state income tax purposes. In addition, some states impose sales or use taxes on purchase prices including tariffs. Companies should evaluate whether state or local tax refunds are available or whether prior overpayments remain unrecoverable.

They can. Refunds are paid to the importer of record, which may not be the entity that ultimately bore the economic cost of the tariffs within a multinational group. This disconnect can require transfer pricing adjustments, true-ups, or policy revisions to align outcomes with arm’s-length principles.

In a merger and acquisition or other deal context, expected or potential IEEPA tariff refunds are generally not treated as earnings or EBITDA normalization items. Because refunds remain contingent, uncertain in timing, and subject to administrative and procedural risk, they’re typically excluded from EBITDA adjustments in a quality of earnings (QofE) analysis. Instead, disclose and quantify historical IEEPA tariffs incurred in the QofE as a non-recurring cost exposure, without assuming recovery.

Any potential refunds are more appropriately treated as contingent upside and addressed through transaction structuring mechanisms — such as purchase price adjustments, indemnities, escrows, or specific refund-sharing provisions in the stock purchase agreement — rather than through historical earnings normalization.

This approach preserves the integrity of historical EBITDA, helps avoid embedding contingent gains into valuation metrics, and allows buyers and sellers to separately negotiate the economic allocation of future refund proceeds based on risk tolerance and deal dynamics.

Some importers are exploring transactions to monetize expected refunds in exchange for upfront cash. While this may improve liquidity, it typically involves a discount to the expected recovery and may raise legal, accounting, and tax issues that should be carefully evaluated.

Yes. In certain industries, downstream customers or consumers may assert claims to tariff refunds, particularly where tariffs were passed through in pricing. Companies should consider contractual, commercial, and litigation risks before assuming refunds can be retained without challenge.

Although IEEPA tariffs were invalidated, the administration has already imposed replacement tariffs under other statutory authorities and initiated additional trade investigations. As a result, tariff exposure hasn’t disappeared, and refund planning should be coordinated with ongoing trade compliance and supply-chain strategy.