US Customs and Border Protection announced on Friday that the tax refund program will open on April 20, starting a process that could return more than $160 billion to importers after the Supreme Court struck down President Donald Trump’s tariffs earlier this year.
But if the phrase “cash back” makes you think that money is going back to consumers, think again. Taxes are paid by importers – usually companies, not individual consumers – and they are likely to be eligible for a refund. More than 300,000 exporters are waiting for refunds tied to the 53 million entry.
A poll released last month by the Groundwork Collaborative and Data for Progress, a left-leaning think tank, found that 42% of voters think “refunds should go directly to American households that pay the highest rates.” However, at this time, major companies have not shown any plans to refund money to customers in the event of a tax refund.
A new CNBC survey of chief financial officers found that while 12 of 25 executives surveyed say their companies are pursuing tax returns, none say their companies intend to share the money directly with customers.
How did the tax refund fight get to this point?
In a 6-3 decision on February 20, the Supreme Court struck down the tariffs that Trump had imposed under the International Emergency Economic Powers Act, or IEEPA. The ruling opened the door to reinstatement, although the justices left decisions about who would be reinstated to lower courts.
In March, Judge Richard Eaton of the US International Trade Court ordered the government to implement a tariff recovery plan. Eaton rejected the government’s claims that the refund process should be long and difficult. “I believe that there will be no chaos associated with the provision of these refundable funds and it will not cause damage,” he said at a recent hearing.
That view contradicts the president’s words that “we will end up in court for the next five years.” In an earlier social media post, Trump also said it was “impossible” to roll back taxes, adding, “it could be 1929 all over again, GREAT DEPRESSION!”
In accordance with The New York Times“a confusing list of lawsuits” filed by businesses seeking refunds, in addition to lawsuits from regulators and consumer class action lawsuits.
US Customs and Border Protection, or CBP, has indicated that it will take more than 4 million man hours to complete refunds using existing systems. That is why a new tool known as CAPE, a tool for Integrated Management and Processing Entries, is being developed to speed up processing.
In the coming weeks, the government could appeal Eaton’s latest order related to tax returns, according to Law360. It is still the president’s belief that no money should go back to the companies, but after his loss at the Supreme Court, legal experts believe that this is not possible. Management lawyers may focus on delaying refunds or making it harder for businesses to restore jobs.
Last week, Eaton revised his order, starting a 60-day clock (from April 7) for the government to appeal the case to the US Circuit Court of Appeals. That timeline gives until June 6 to file an appeal.
It is not clear which companies will have access to the new system on April 20. The CAPE tool is intended to “simplify [IEEPA] tax refund requests made pursuant to a court order” and “Stage 1 CAPE is limited to certain entries that are not determined and other entries within 80 days of completion,” according to a recent announcement from CBP.
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