New Drawback Law Enacted
On February 24, 2016, the President signed Public Law 114-125, which enacted H.R. 644 “The Trade Facilitation and Trade Enforcement Act of 2015.
The enactment of this law marks the successful completion of a nearly 10 year effort by Charter Brokerage, along with other members of the trade community and Customs, to enact the most sweeping enhancement and expansion of the drawback law in our nation’s history.
As one of the original architects of eight-digit substitution drawback for petroleum products and their derivatives, Charter has been at the forefront of the efforts to expand this approach to all U.S. industries. As the broker that has almost exclusively filed all historic eight-digit drawback, Charter’s drawback professionals have more experience than any other drawback services provider in eight-digit drawback.
This new law provides extensive opportunities in nearly every segment of the U.S. economy. Charter is positioned to unlock this value for its clients with its widespread professional background including:
- More than 100 years of combined specialized experience in eight-digit drawback
- Filed more than 90% of the historic eight-digit drawback claims with Customs since 1994
- More than 20 years of expanding client’s drawback programs
- The resources necessary to manage large, medium and small accounts – Charter currently files approximately 33% of total drawback refunds issued by Customs
- Unmatched knowledge of the contents of the new drawback law and the process to maximize drawback under these new rules.
If you are an importer (or buy from an importer), an exporter (or sell to an exporter) or a manufacturer, this new law provides opportunities for savings. If you are interested in understanding how to capture these new financial savings, please call 281.599.1252 to speak with one of Charter’s Duty Drawback professionals or email Charter Brokerage at Drawback@Charterbrokerage.net.
Drawback & Tax Recovery Services
Charter is the leading provider of duty and tax drawback services in the United States. Charter files claims for more duty and tax recoveries than all other U.S. service providers combined. Our legal experience, planning skills, high-level expertise and in-depth experience are simply unmatched by any other service provider. Our services include all matters necessary to establish and run a sophisticated drawback program that will maximize recoveries, including business review and identification of opportunities, planning and optimization, documentation, claim filing and audit support.
With its unmatched knowledge and experience, Charter ensures that its clients recover all duty and tax drawback to which they are entitled under the law.
Charter has the expertise to identify drawback opportunities that are available only in cooperation with suppliers, customers, traders or others in the supply chain and are often overlooked.
Charter worked with CBP to draft the language of the current drawback law and its several amendments and we participated in the development of the current drawback regulations.
We led the legislative initiatives that resulted in
• the recovery of taxes and fees in addition to duties; and
• the adoption of the eight-digit tariff substitution rule for petroleum and chemical products.
We are working with CBP, industry groups and congressional staff on legislative changes that will enhance benefits and make the administration of the drawback law more efficient.
Set forth below are brief summaries of the various types of duty and tax drawback related to petroleum products, petrochemicals, chemicals and plastics.
Petroleum, Petrochemicals, Chemicals and Plastics – The provision of the drawback statute that is most significant to Charter and its clients is subsection (p), the so-called petroleum and chemicals derivatives drawback section (see 19 U.S.C. 1313(p)). Subsection (p) permits the recovery of customs duties (and, in certain cases, taxes and fees) paid on importation of goods classified in specified eight-digit descriptions of the Harmonized Tariff Schedule when matched against exports of the same classifications, provided that the exports occur within 180 days after import. This section applies to petroleum, petrochemical, chemical and plastics products and, because it permits direct and indirect substitutions, Charter is able to identify potential recoveries often overlooked by other service providers.
Unused (Non-Manufacturing) Drawback – This provision of the drawback statute (19 U.S.C. § 1313(j)) allows for a refund of duties, taxes and fees on imported merchandise exported in essentially the same condition. Imports can be matched to exports by direct identification or by substitution (i.e. the export is “commercially interchangeable” with the import). This type of drawback can apply to all types of imports, and the export must occur within three years after the import.
Manufacturing Drawback – These provisions of the drawback statue (19 U.S.C. § 1313(a) and (b)) allow for a refund of duties (no taxes and fees) paid on imported merchandise based upon the production and export of articles from imported, duty-paid merchandise or similar (“same kind and quality”) domestic merchandise, which is substituted for the imported merchandise. This type of drawback can apply to a variety of manufacturing operations and various time limits apply.
Drawback is a complex area that contains a vast array of rules, regulations and limitations. As the nation’s leading drawback service provider, Charter assists clients in maximizing their drawback in a compliant and efficient manner.