TFTEA, Proper Classification, Manufacturing Drawback . The primary liberalization of the duty drawback law passed as part of the Trade Facilitation and Enforcement Act of 2015 (TFTEA) involved redefining the substitution provision of the drawback law. Our legal experience, planning skills, high-level expertise and in-depth experience are simply unmatched by any other global trade service provider. The primary goal of the Trade Facilitation and Trade Enforcement Act (TFTEA) is to encourage international trade through the simplification of U.S. trade regulations. Drawback Simplification is Finally Here! Page ii GAO-20-182 Customs and Border Protection Figure 4: Example of Direct IdentificationUnused Merchandise Drawback upon Destruction 8 Figure 5: Example of Substitution Unused Merchandise Drawback upon Exportation 9 Figure 6: Example of Rejected Merchandise Drawback 10 Figure 7: Timeline of Selected Changes to … The information contained herein is not intended to be “written advice concerning one or more Federal tax matters” subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230. As a result, significantly more products will be eligible for unused substitution drawback. Goods subject to Section 232 are ineligible for refund of 232 duties, per Presidential Proclamation 9739 and 9740. The two most popular uses in the U.S. for the measure involve substitution manufacturing and unused merchandise. What can you do to prepare? Legislative correction to allow taxes and fees paid. Import, Customs & Related Regulatory Compliance, Import, Customs & Related Regulatory Compliance, Country of Origin Determination and Marking, Foreign-Trade Zones, Bonded Warehouses & Duty Deferrals, Free Trade Agreements & Trade Preference Programs, Prior Disclosures / Voluntary Self-Disclosures, Government Relations & Trade Negotiations, Miscellaneous Tariff Bills Representation and Advocacy, Antidumping Duty Investigations & Proceedings, Countervailing Duty Investigations & Proceedings, Section 301 Unfair Trade Practice Proceedings, Section 232 National Security Proceedings, Section 337 Unfair Trade / Trademark Infringement, Investigations, Voluntary Self-Disclosures & Audits, Dispute Resolution: Classification & Valuation, Food, Beverage & Perishables (USDA Regulated), Section 301 Investigation of Digital Services Taxes, Section 232 Investigation of Titanium Sponge, Section 232 Investigation of Transformer Components, Section 232 Investigation of Mobile Cranes, U.S. Starting February 24, 2019, companies who intend to file drawback claims must follow the new TFTEA regulations. - requiring the import entry summary line item to be identified for all imported goods for TFTEA drawback claims - allowing substitution drawback claims based on goods within the same eight-digit HTSUS number (with some exceptions), thus eliminating the need to file a commercial interchangeability ruling - specifying that substitution drawback will be calculated as 99 percent of the lesser of the amount of … Drawback is the refund of up to 99 percent of certain duties, internal revenue taxes, and fees collected on imports when the imported product or a substitute product is exported or destroyed or used in manufacturing a finished product that is exported or destroyed. TFTEA made numerous changes to modernize the drawback law, including allowing substitution drawback claims based on goods within the same eight-digit HTSUS number as well as claims against imports and exports that are within five years of the date of the claim. The two most popular uses in the U.S. for the measure involve substitution manufacturing and unused merchandise. Substitution Drawback Under TFTEA . However, the Government Accountability Office recently warned CBP must continue to exercise strict fiscal oversight of drawback claims refunds. Companies that previously filed claims under the prior regulations covering partial imports on an entry need to evaluate how much of those remaining imports on the same import entry can be filed under the TFTEA rules. With the final duty drawback regulations in place, we can finally begin to plan for the long-term future under TFTEA. However, U.S. Customs and Border Protection has refused to process TFTEA claims or pay them through accelerated payment, citing uncertainties about the calculation of drawback until final regulations are in place. Substitution manufacturing includes both imported merchandise and any merchandise of the same kind and quality that are then exported or destroyed. The information contained herein is of a general nature and based on authorities that are subject to change. TFTEA substitution drawback claims potentially subject to limitations on internal revenue tax refunds (accounting class code 365) – Trade is advised not to submit additional AP claims with the accounting class code 365 until notified by CBP to do so. United States Customs and Border Protection (“CBP”) published a highly anticipated Final Rule on December 18, 2018, with the effect of modernizing duty drawback as required by the Trade Facilitation and Trade Enforcement Act of 2015 … TFTEA) being passed into law.. Join KPMG LLP’s trade professionals as we explore the final drawback regulations. Explore economic & statistical consulting, State and local tax communications industry practice, Tax framework to support the workforce of the future, Recent and archived KPMG authored articles on tax topics. USC 1313 (a&b) - Drawback on raw materials or component parts exported as part of a finished product. TFTEA Drawback Simplification Example The new rules ease the requirement for unused substitution drawbackby allowing a match to the 8-digit tariff classification (of the 10-digit classification) to the imported article. Struck “because of its” and replaced with “upon entry or” 2004 – 2007. Amendments to Miscellaneous Trade Bill securing gas/jet substitution. Part 1: USMCA Overview & Qualifying Your Goods . Schedule: (click date details) Location Date ; Webinar: Jan 14th : Webinar: Mar 15th: … Also, the amount of … Drawback is paid based on the exportation or destruction of imported merchandise or a valid substitute. Substitution for drawback purposes (1) In general. Drawback Simplification Newsletter Trade Facilitation and Trade Enforcement Act of 2015 Section 906 Background On February 24, 2016, the President signed the Trade Facilitation and Trade Enforcement Act of 2015, strengthening the capabilities of the U.S. Customs and Border Protection (CBP) to enforce U.S. trade laws and regulations, streamline and facilitate the movement of legitimate … Charter is the leading provider of duty drawbackand tax recovery services in the United States. Classification . On February 24, 2016, the Trade Facilitation and Trade Enforcement Act of 2015 (TFTEA) was passed into law and signed by former President Obama. 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