KPMG Spark is the online accounting service for small and midsized businesses providing bookkeeping, tax prep, and facilitating access to payroll services — where and when you need it. As a result, claimants have not received any immediate benefits from TFTEA. Starting February 24, 2019, companies who intend to file drawback claims must follow the new TFTEA regulations. 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. Currently, for Unused Merchandise Substitution Drawback, a drawback claimant is required to prepare and file with Customs an application for this type of drawback. Drawback may apply to a variety of import/export transactions. In particular, drawback; a long-standing yet complex trade mechanism allowing for duty refunds on goods imported to the United States and subsequently exported, can create opportunities for broader qualification through the easing of product substitution rules, a simplified filing time frame, and modernized record-keeping requirements. TFTEA) being passed into law. Customs duty drawback has long been recognized as a lawful means by which importers may reduce the realized impact of tariff duties on imported items. In an Oct. 12 order, the CIT directed CBP to file final regulations with the Office of the Federal Register on or before Dec. 17. Helping tax leaders embrace disruption, seize new opportunities and drive greater value. For purposes of paragraph (2), a drawback claimant may use the first 8 digits of the 10-digit Schedule B number for merchandise or an article to determine if the merchandise or article is classifiable under the same 8-digit HTS subheading number as the imported merchandise, without regard to whether the Schedule B number corresponds to more than one 8-digit HTS subheading number. For more detail about the structure of the KPMG global organization please visit https://home.kpmg/governance. 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. Those regulations must become effective as of the day of their filing, except that the provisions related to drawback of excise taxes may become effective 60 days after publication in the Federal Register. Duty drawback was passed by the United States Congress in 1789. Now and for the future. For example, if the first drawback claim is a TFTEA Substitution drawback claim and it uses line item number 2 from import entry summary 943-XXXXXXX-X, this entry summary line becomes ineligible for use on a TFTEA direct identification drawback claim and visa versa. TFTEA and Duty Drawback 3 Trade and Customs impacts 4 Managing the drawback program of the future 10 Key takeaways 12 a eaare iite iaiit artnershi an the eer ir o the netor o ineenent eer irs aiiate ith nternationa Cooerative nternationa a iss entit rights reserve he nae an ogo are registere traears or traears o nternationa . The long-awaited TFTEA drawback regulations were published on December 18, 2018. Figure 3: Example of Substitution Manufacturing Drawback 7 Contents . Since 1977, we have set the standard for international trade lawyers and consultants, providing comprehensive and effective customs, import and export services to clients worldwide. Duty Drawback New Opportunities - Part 2 . The above guidance … The substituted merchandise used in producing the exported product must be classifiable under the same 8-digit HTSUS subheading number as the designed imported merchandise. Substitution Drawback Under TFTEA . The final rule addresses substitution drawback for excise taxes. The new rules regarding excise tax drawback will take effect February 19, 2019. Classification . TFTEA Filers: This category includes new claimants that will file under TFTEA to take advantage of HTS level substitution. TFTEA, Proper Classification, Manufacturing Drawback . • TFTEA also fully converts the concept of “duty drawback” from the original principle of processing, or adding value to, an imported product for export, to that of substituting a imported product for an exported product by authorizing drawback of 99 percent of “(I) the amount of duties, taxes, and fees paid with respect to the imported merchandise; or … The bad news…CBP has taken the position that drawback claims will be paid under the new law until final rule making is in place. If submitted prior to notification from CBP, there is a risk of bond decrementation and loss of AP for the life of the claims. Pre-TFTEA Substitution Claims: 301/201 duties are refundable, in full, on pre-TFTEA substitution claims. Information required for drawback compliance program: 20 and replaced with “ upon entry or ” –! & Qualifying your goods, Inc. www.alliancechb.com | 8 Figure 3: Example of substitution manufacturing drawback 7 Contents not. 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