February TFTEA Implementation

The U.S. Department of Customs and Border Protection (CBP) is preparing for the implementation of new changes to duty drawback specified in the Trade Facilitation and Trade Enforcement Act of 2015 (TFTEA). Passed in 2015, the law gave CBP a two-year implementation period which expires on February 24, 2018.

Important changes of note concern ACE (Automated Commercial Environment) and how drawback, the refund of duties, taxes, and other fees, are handled. Starting on February 24th, drawback, as defined under current statue, will begin to be filed through ACE. Furthermore, TFTEA greatly changed many aspects of drawback law. These new TFTEA claims will also become effective starting on February 24th. This distinction is important because core drawback claims, under the current legislation, will continue to be accepted via ACE until February 24th, 2019, as specified under TFTEA. During this transition, claimants will be able to choose whether they would prefer to submit under the current legislation or under TFTEA.

Other important changes under TFTEA include:

  • Redefining the concept of “substitution” of exported goods for imports. This change
    uses the Eight-digit Harmonized Tariff Schedule of the United States (HTSUS)
    classification or Export Schedule B numbers instead of part number-based criteria.
  • The timeline for filing a drawback claim related to a given import has been expanded
    from three years to five years from the date of importation.
  • Certificates of delivery are no longer required. Claimants must only be able to produce
    “normal business records.”

Final touches are still being put on the exact specifics for how ACE and TFTEA will function. No new or revised regulations relating to TFTEA have been issued. However, regulations are currently being reviewed by the Treasury and must still be reviewed by other agencies as well. CBP is planning to release a guidance document for policies that will be applied to TFTEA claims while these regulations are still being reviewed. Keep your eye out for these finalized documents, as understanding the regulations and differences between regulations will be especially important for this transition year.

Max Krauskopf