CBP Eliminates IRS Letter Requirement for Drawback Refunds of Federal Petroleum Excise Tax
U.S. Customs and Border Protection has issued a notice stating that it has eliminated one of the conditions that must be met when filing drawback claims for the refund of the federal excise tax (Spill Tax1) paid on imported petroleum products, including crude oil.
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Requirement for Letter from IRS No Longer Needed for Drawback Claims
CBP is removing the condition that a letter from the Internal Revenue Service (IRS) must be filed in order for drawback to be paid.
CBP is making this change as it recently received a letter from the Treasury Department confirming that the Internal Revenue Code does not allow a refund of, or credit for, taxes paid under 26 USC 4611 merely because the taxed product was destroyed or exported after the product was entered into the U.S. for consumption, use, or warehousing.
(CBP previously required the drawback claimant to provide to CBP a letter issued by the IRS that stated there is no refund, credit, or adjustment claim pending before the IRS and there has been no refund, credit, or adjustment of the tax on which drawback is being claimed other than any claim, credit, or adjustment that is set forth on the attached IRS Forms 720 and 6627.)
CBP's Instructions
CBP continues to state that drawback claims will be processed when reaching the workable status and the tax will be refunded upon liquidation of the drawback entry. The refund of this tax will not be made via accelerated payment privileges.
CBP will pay drawback of the tax paid on importation of a petroleum product under 26 USC 4611(a)(2) for claims made under 19 USC 1313(j), which may include an export made in compliance with 19 USC 1313(p)(2)(A)(iii) or (iv), when the following conditions are met (the requirement for an IRS letter has been deleted):
- The claim meets all other statutory and regulatory requirements, including timeliness of the claim under 19 USC 1313(r).
- The claimant submits a copy of the tax return that includes IRS Forms 720 and 6627, and the tax worksheet that lists the petroleum products on which the tax that is the basis for drawback was paid. The claimant must certify, in writing, the documents to be true copies of the return on the petroleum products that are the subject of the drawback claim.
- The claimant certifies, in writing, that it has not and will not claim a refund, credit, or adjustment and will not enable any other person to claim any refund, credit, or adjustment of the tax.
1Under 26 USC 4611(a)(2), the Spill Tax is imposed on any petroleum product entered into the U.S. for consumption. It is paid directly to the IRS and is filed using a Quarterly Federal Excise Tax Return (IRS 720).
(The Miscellaneous Trade and Technical Corrections Act of 2004 (Public Law 108-429), amended 19 USC 1313(j) (unused merchandise drawback) to permit drawback of a tax or fee paid under Federal law upon entry or importation.
In June 2008, CBP issued a notice announcing that as of May 1, 2008, it would begin issuing Spill Tax refunds under the Drawback program for imported petroleum products, including crude oil.)
(See ITT's Online Archives or 06/19/08 news, 08061910, for BP summary of June 2008 notice.
See ITT's Online Archives or 04/12/05 news, 05041205, for Part II of BP's summary of CBP's memorandum on the drawback changes made by P.L. 108-429, with information on the amendment of 19 USC 1313(j).
See ITT's Online Archives or 12/23/04 news, 04122325, for Part XVI, the final part of BP's summary on P.L. 108-429, with a link to previous parts.)
CBP notice (dated 09/02/08) available at http://www.cbp.gov/xp/cgov/trade/trade_programs/drawback/drawback_tax.xml