Drawback Regulations Won't Be Ready by Feb. 24, Leaving Potential Changes for After ACE Implementation
CBP doesn't expect the Treasury Department to approve proposed regulations for coming changes to drawback procedures before the Feb. 24 effective date, a CBP spokesman said by email. The changes are the result of the Trade Facilitation and Trade Enforcement Act, which allowed for two years of preparation before the drawback overhaul became effective. "CBP will, however, accept TFTEA drawback claims in" ACE, "with processing to occur once the regulations are finalized," the spokesman said. CBP has said it will only allow accelerated payment for TFTEA drawback claims after it issues its final rule (see 1801260036).
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"CBP has been working with internal and external stakeholders to develop an interim guidance document which will provide processing guidelines for TFTEA drawback claimants," the spokesman said. "This guidance will be made public before February 24, 2018 and will address the issues that have arisen as a result of stakeholder engagement." CBP has also issued draft Customs and Trade Automated Interface Requirements (CATAIR) instructions for software developers on TFTEA drawback, with the latest update coming in late January (see 1801290007).
In order "to ensure full transparency around the new drawback process, CBP has worked extensively with our drawback trade partners, including regular meetings, the posting of technical guidance on CBP.gov and testing with trade filers," the spokesman said. "CBP’s technical guidance provides a great deal of information on the Core and TFTEA drawback processes. Once the regulations are finalized, CBP will continue to work with our drawback trade partners to identify any potential programming changes that result, and respond to questions."
Those potential programming changes leave "both software developers and companies filing drawback claims open to the possibility of having to rework and [resubmit] a claim after the final rule has been published,” said Liz Connell of software developer Integration Point. “As with any filing with CBP the expectation is that the filing will be complete and accurate based on the regulations. So when the final rule of the regulations comes out it could have an ultimate impact on the CATAIR, thus meaning filers will have to redo some of their claims to ensure they are “perfect,” she said.
The announcement that the regulations would come after the ACE deployment was expected, given recent discussions between the trade community and CBP, said David Corn, vice president of the drawback consultant Comstock and Holt. CBP's interim technical guidance "should be published in the next week or two as they work out the feedback that the Trade has provided upon initial review," Corn said. "CBP can only do so much when they don’t have control of the regulations at this point, but we’re pushing hard to see that they’re released as soon as they can be."
The upcoming drawback regulations are necessary to address several holes in the new drawback scheme left unresolved by TFTEA. Though the drawback section of that law is relatively detailed, several significant details, such as how to handle changes in classification that take place after the Harmonized Tariff Schedule (HTS) number is originally declared on an entry, and how to extend the “lesser of” concept to manufacturing substitution drawback, still need to be worked out in those implementing regulations (see 1606070040). Software developers and filers have expressed concern over the limited amount of time for implementation of the new requirements (see 1710040050).