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ACE Drawback and the Harbor Maintenance Tax

October 25, 2019
Despite unease over Trump’s section 301 tariff disputes between the United States and China, Charter Brokerage is still successfully finding drawback refunds for their clients. Though some companies are hesitant to invest in an overall environment of uncertainty, Charter is ever aware of changing trade policies and still taking advantage of drawback opportunities. The Quarterly Harbor Maintenance Tax (HMT) is one example of how Charter uses their expertise in drawback procedure to stay ahead of other providers.

The HMT is designed to pay for harbor maintenance and development. Also known as the Harbor Maintenance Fee (HMF), it is a quarterly assessment on imports, domestic shipments, Foreign Trade Zone admissions (FTZ), and even passengers. Though other drawback service experts have found barriers with claiming drawback on HMT, Charter has been able to leverage their extensive knowledge of duty drawback laws and the industry to allow their clients to claim these additional refunds.

In order to claim drawback on HMT, software called the Automated Commercial Environment (ACE) is used to file the necessary forms. ACE is the U.S. Customs and Border Protection (CBP)’s automated broker interface through which the trade community reports imports and exports and the government determines admissibility. It incorporates core and Trade Facilitation and Trade Enforcement Act (TFTEA) drawback capabilities which align with current drawback laws, as well as the ability to file drawback claims following the new TFTEA legislation. In order to comply with TFTEA, all duty drawback claims are required to be filed electronically through this system as of this year.

However, in February of 2019, Charter Brokerage discovered a programming flaw in ACE drawback systems. Since efficiency and accuracy are important for the success of their clients, Charter Brokerage took charge as the main advocate for Customs to fix this problem. In reference to the drawback class code, it was called the “039” issue. Though Customs had programmed for refunding Quarterly HMT on Customs Form 7501, there was faulty programming found on Customs Form 349. Since this form is the means for paying HMT on FTZ admissions, it resulted in an inability to process drawback claims in ACE on this class of activity entirely. Since the Automated Commercial Environment is the only portal through which drawback claims can now be filed, the 039 issue had the potential to cause major losses for importers.

CBP followed through on Charter’s initiative and on August 18, 2019 Charter successfully completed testing the CBP’s programming fix for refunding HMT. Since it was deployed in the ACE drawback production environment, Charter has been commencing the administrative process with CBP for all drawback claims that include FTZ activity with HMT claims to be processed for payment under accelerated payment privileges as applicable. Charter Brokerage thus files claims to U.S. Customs for more duty and tax recoveries than all other U.S. service providers combined.

Charter’s legal experience, planning skills, high-level expertise and in-depth experience are simply unmatched by any other global trade service provider. Their services include all matters necessary to establish and run a sophisticated duty drawback program that will maximize duty and tax recoveries, including business review and identification of opportunities, planning and optimization, documentation, claim filing and audit support.

If you have any questions regarding Harbor Maintenance Tax or other duty drawback rules, please reach out to any member of Charter’s drawback team at drawback@charterbrokerage.net