Audits & Drawback: What Every Importer Needs to Know Right Now

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Thanh Nguyen

Hello, everyone. Thank you for attending today's tariff trends webinar. My name is Thanh Nguyen. I'm a senior trade advisory associate here at Flexport. And prior to Flexport, I actually worked with CBP. I was a CBP senior auditor with nine years of experience conducting customs audits. So we have a lot of content to cover today. But before we begin, I'd like to go over a few housekeeping items. On your screen, on the right side of the sidebar, you'll see a section for q and a where you can submit your questions. At the end of the presentation, we'll host a q and a and answer a few questions from the audience. So if you have any concerns or questions that you wanna bring up to us, please be sure to get your questions in as early as possible so we can address them. In the same sidebar, you'll also see a section labeled docs. This is where you can download a copy of today's slides and also that we have a few helpful resources, such as our tariff simulator and tariff refund calculator, which may be, helpful to you. Above your screen, you'll see a button labeled audit your customs broker. We'll explain a little more later about what's contained in here, but in the context of today's webinar, it'll be very important, very helpful to you. It's designed to help catch some issues with tariff stacking, whether you're underpaying or overpaying, and some very common mistakes that, we see with your, customs declarations. So be sure to check that out, and we'll explain a little more later. So now a brief legal note. Please keep in mind that all information provided in this session today, and current time may not be customized to your specific business requirements. It's designed to be very high level and very general. So we always recommend for your situation, please reach out to a flex expert to discuss, any issues, and to receive more information about your circumstances. Joining me a little later in this presentation is my colleague, Tim, who is the head of drawback here. We'll be going over a few things, related to drawback, and as well as some key information. So going over today's agenda, we're gonna be talking about the CAPE mechanics and administrative hurdles. And then we'll go over a little bit about CUP audit readiness and what kind of things you should be looking for, what customs we'll be looking for, and then we'll go over duty drawback and the IUP tariff refund era. Then we'll go over some resources, and finally, we'll close the webinar with some q and a, and we'll address as many questions as we can. So without any further delay, let's get started. Cape mechanics. So phase one of Cape, as you know, will be deploying on April, which is upcoming Monday. They'll be shifting refunds from manual entry by entry processing to a batch processing, and we'll go over a little bit about how that will, happen and what you need to do. Phase one only process unliquidated entries and entries that are no more than eighty days past your liquidation date. And the reason why is because, customs can reliquidate entries within ninety days, but customs needs a little bit of time. So if an entry is eighty one days past, it'll be rejected by Kate because there may not be sufficient time for customs to process that. For other entries, it should be covered by phase two, but we have yet to receive that information and updates from CVP. So the general process is that importers or brokers can upload a CSV file CSV file containing up to 9,999 entry numbers directly into the ACE portal where it'll then be processed by the CAPE system to determine whether you're eligible for refunds. Now, so administrative hurdles and reminders, As of 02/06/2026, all refunds must be issued electronically to the import of record or to their notified party. And the ACH account must be you must be a US bank account and linked through the ACE portal. So if you haven't done yet so yet, please make sure your ACE account is set up, and there's an ACH US bank account set up for refunds within your ACE account. For foreign importers with no US bank or those wishing to designate another party to receive the refund, please be sure to use a 4811 to designate the notified party. And it's a two step process. You must file the forty eight eleven to designate the notified party, and the notified party must be listed on every entry summary. So let's get into some c b CVP audit readiness and some things that I wanted to share with everyone that, I've noted, across my nine years with CVP and some things that we check for, that may be useful to you, especially with the upcoming refund process. So touching base on how to file entries through CAPE, now what? Right? What what is the CAPE process? What does it look like? So first, they have a CSV template that you can download through the CAPE portal or the CAPE, module within ACE. You place your entries on this template, and then you file it within cape. Cape conducts initial validation activities where it's just very basic, data validation, making sure there are no duplicates, making sure the entry is not canceled, actually exists, and double checking that there are actual tariffs on there. In the case that the data validation fails, Kate will reject those specific entries and return them, to you, in which case you can correct them or refile them if you wish. But for those that are accepted within the system, one thing that I wanted to really emphasize is that there is a secondary CBP validation step that occurs. So it's not just as soon as CAPE accepts it, you receive your refund. No. There is an additional CBP validation step because, as a reminder, these are primarily unliquidated entries. During this phase, importers have the burden of proof. So in other words, in a CBP, perspective, this is the period where CBP scrutinizes entries the most because since the importer has the highest burden of proof during this stage, it's easy for CBP to conduct enforcement. So since these are still unliquidated, you can bet CBP will be looking into these very closely, to determine if there are any compliance concerns and if they warrant additional review. In the case that CBP approves of it, they'll liquidate or reliquid your entry without IUP tariffs and issue a refund. But in the case that CBP does identify that there are compliance concerns warranting further review, they'll conduct additional validation actions and conduct potential enforcement actions, which we'll go into, what those actually are. And in the case that there are concerns, what kind of enforcement actions may take place. So in fiscal year twenty twenty five, there are over 50,000,000 entry summaries filed. But with only limited personnel CVP, it's impossible to verify 100% of all entries. So the big question is, how does customs actually determine what to scrutinize more? Right? And customs uses a risk based approach to determine whether there are imports that they should look closely into, whether there are certain importers that are higher risk or even, in some situations, what suppliers are higher risk. And so this slide doesn't include all of the risks that customs considers. There's a few more, of course. But, at a very top level, CUP generally, bases their risk assessment or their risk based approach on priority trade initiatives and a couple other areas of concern. So primarily agriculture and quota, anti dumping countervailing duty, import safety, intellectual property rights, revenue, textiles, free trade agreements, and a couple other noteworthy ones, green trade, so environmental laws and safety. And then forced labor, where your products are coming up from certain countries and certain types of products may have a higher risk of forced labor. And so customs is increasing their enforcement on those other areas of concern as well. But out of all these, we're gonna be focusing primarily on revenue. And in the context of customs, this is due to these taxes and fees. That's considered as revenue to customs. So the big question is when it comes to revenue, what does customs look at, and how do they determine if there's a compliance concern when it's related to revenue or duties? So common factors for deterring duty liability. I've got again, this doesn't include all the factors because when when it comes to tariffs and, trade remedies, it's pretty vast and there's a lot of factors that can change duty liability, but we're gonna be focusing on value, classification, country origin, and trade remedies. So for value, we like to verify whether there's a bonafide sale. Transaction value is one of the most commonly used evaluation methods, but there is a requirement that there needs to be a bonafide sale or a good faith sale for export to The US. Right? And in case that that requirement is not met, the question is what valuation method can you use? Overall, customs wants to check that their total cost of production is included in the value, that is being declared to customs. And in this case well, in evaluation cases in general, customs wants to look at what's being backed up and what's being included into the value. Right? Because we know that certain expenses, certain costs can be excluded from the value such as insurance, and freight costs. But when it comes to valuation, the question is, are you backing up the correct ones? And in the case that you aren't, customs will ask. So in an example, if your invoice value and your payments aren't matching up and your payments include additional, payments to the supplier, customs will wanna know what that payment's for. Right? Why isn't that payment included in your invoice value? And as an importer, you should be able to provide documentary evidence to prove, hey. This is insurance free or, hey. These are certain costs that can be backed out. They are not dutiable. Right? Because when it comes to valuation, if you are sending conditional payments to your supplier that is not accounted for, customs can use a court case, generic sportswear company versus US to basically say, which basically says all payments made to the seller for the benefit for their benefit is generally included in the price actually paid or payable. And it's on the it's in words responsibility to prove it otherwise. So you wanna be very careful about what your evaluation or what the value you declare is and if it includes the entire value that is dutiable. And then in a company sales, so related party, we we see often that, importers may not declare whether they're related to the supplier on their entries. This is a major issue because in the case that you are related party and you weren't declaring it before, customs will flag it as a risk because your relation to your supplier may affect the value. And, of course, if the value is affected, customs is getting less duties potentially, and they're not gonna be happy about that because you're taking money away from them. So make sure that related parties are declared. And in the case that you are related party, if customs ask for information that you can support, whatever evaluation is being declared. So we see often that importers may think a transfer pricing agreement by itself is sufficient, but customs, has a stance that a chance for pricing agreement by itself is not sufficient to prove the valuation. So you wanna make sure that you have all the information needed to prove that your evaluation method is consistent with customs valuation method. For classification, the tariff declared determines a lot of, plays a large role in determining what your duty liability is. So in the context of this webinar, I wanted to just, iron out and emphasize that whatever classification, is correct, it needs to be consistent with your product description as well. Because whenever we do audits and conduct audits, we we look for consistency in what you're declaring on your documents versus what is classified. And then we also do trend analysis or classification history. Right? If there is a sudden shift in classification that happened at a specific period of time. That's a higher risk for us in general. We assess that at higher risk because the question is why are you changing the classification? In in which case, there may be an explanation. Right? There may be a legitimate explanation, and maybe you actually did not, import the same product and it's different now. Or perhaps it, you know, it there is a change and customs need to find out why there's a change and if they need to go back further to address any issues and compliance concerns. And then cargo examinations is on here because if customs determines there is a compliance concern and they do not have enough information to determine the classification, they have been known to conduct additional cargo examinations to actually ascertain the correct classification of your products. They've been known to take samples, conduct the I've I've been on actually one of those. It was very interesting, where we cannot determine the applicability of anti dumping in a country of origin on the product. So the we did conduct the carcase examination, and we went out and they actually broke one of the court slabs to take the samples sent to the lab. So if there's not enough information provided in your entry package and, if customs is asking for information and it's not sufficient to determine classification or even applicability of duties, you can expect additional cargo examinations to occur. Country of origin. So this plays a lot with trade remedies, and we see a lot of bad actors nowadays trying to claim a different country of origin. So making sure your country of origin is consistent with your documentation and it's correct is very, very important. So in other words, how well do you actually know your products and suppliers? In the context of trade remedies such as anti dumping, countervailing duties, or even section two thirty twos and three o ones, country to origin plays a big role because it may determine your cap on duties or whether even subject to the duties at all in the case of anti dumping and countervailing duties. So we see a lot of suppliers trying to change the country of origin, and selling that to the importers. So when I say how old do you know your suppliers, we see this issue happening where the importer does not know what's going on in their supply chain. Right? A product that is claiming a country origin, Thailand, may actually be China when you look at their rules of origin. So the big question is, how well do you actually know your product? Is it the correct country of origin? Did it meet their correct substantial transformation requirements, or is it transshipped? Transshipping in general is not illegal, but in the context of evading duties, customs may view it as illegal because they may be transshipping to try and change the country origin or mask it. And then trade remedies, as we just touched on, and, of course, is very important, within the past year. Yes. You can two thirty two, three o ones, and the anti dumping countervailing duties, which, come at very, very high rates. So the big question is, do you know if your products have stair tariffs stacked correctly, or are the products even subject? So we see a lot of situations where multiple tariffs may be stacked that shouldn't be stacked. And then we also see situations where products that should be subject to a product, or subject to a specific trade remedy is not declaring the tariff. And so customs is gonna be looking at all these to make sure that your tariff stacking is correct, but also are you subject? And so, for example, if you're not claiming auto parts two thirty two duties, and you're not even claiming the appropriate tariff code, customs is gonna flag it and for additional review and send you see a 26 term whether it's an actual auto part. So in the case that CUP does determine that there is a compliance concern, warranty for the review, These are some of the methods that they use to validate or and conduct enforcement actions. And a lot of these, you may be very familiar with, especially in the validations. So we have cargo examinations where they will examine the product physically to determine what the classifications are, rules, so marking rules and anything else that they can do, with the physical examination. And then you have the CEP form 28, which is the import specialist method of issuing a request for information, which is probably the most common method of validation that they use. And then not listed here, but I wanted to point out the, a lot of what we do in audit as well as import specialist is conducting a smell test. So whenever you file your importations and submit your entry packages, we like to, verify the very low hanging fruit. So are your documents consistent? Right? Is is the value that you're you're declaring or you're starting a five zero one consistent with the commercial invoice? And if there are payments, is it consistent with that? Is the weight and quantity consistent? You know, are the date do the dates make sense? Because we've had situations before in audit where the invoice is dated in a completely different period that doesn't make sense in the context of twenty five zero one. So the immediate question that we ask whenever we see issues that don't make sense is why. And then when when we ask why, we're gonna be issuing more request for information and looking into your entries and with more scrutiny because as soon as there is there is an inconsistency that's been identified, through our smell test, we're going to assume that your records may not be accurate or these may not be the real documents that you're submitting to customs. And in the case that there is a compliance concern, some enforcement actions that you may see, cargo targeting. So if there's information that, customs still needs, you can expect them to target some cargos coming in where they'll look at your entries to look at your products to see if there there is risk that warrants further reviews such as an audit. Right? CUP form 29, if they know there is an issue or customers agree with you, they may issue a notice of action and, assess additional duties. And then they maintain and seizing products, if they see that there are products with, concerns. And then audits. So audits is very broad over at trade regulatory audit. We actually categorize our assignments, under non audits and audits. And the main difference really is just, non audits are more risk assessment based. Think of them as CBP form twenty eighth and twenty ninth, but at a slightly higher level of scrutiny. And then audits are the ones where, they're the highest stages of scrutiny where we'll review everything including your accounting records, and going into, you know, your important data analysis, all of that stuff. And audits are generally, longer lasting. Of course, the focus assessments, for example, are the largest type of audits that you may be facing, and those can last they they call them career long assignments over an audit because some of them actually do last your entire career. There were multiple focus assessments that were ongoing while I was at audit that lasted over ten years. So as an importer, you definitely don't wanna be facing one of those. But going over briefly the type of assignments that you may be facing. So surveys and on audits, again, those are more risk assessment based to determine if there is any concern that warrants an actual audit. So those if you're faced with a non audit or a survey, you wanna make sure you do as well as possible. Give, customs, as many records and narratives that you can to, show that you are compliant. Because if there is an issue, it may actually turn into an audit. And most of the audits nowadays are single issue audits where they're focused on any specific issue. So if there was a concern related to anti dumping, that single issue audit may be specifically related to anti dumping, your internal controls regarding that, and your products regarding anti dumping. But because it's a single issue audit, it doesn't necessarily mean that they're stopping it right there. In the case that during the audit, they find there's another concern, it may result in additional audits occurring back to back. So a single issue audit for anti dumping may turn into a valuation issue, which may turn into a classification issue. In which case, at that stage, it's, you know, becoming more and more like a focus assessment. So trade audit operations are, it's a task force set up to address issues that, trade regulatory audit believes is very important at the time. So one of the ones, that CVP is very focused on right now is anti dumping and evasion over, in Asia. There has been an increased amount of evasions. So trade auto operations set up a task force to conduct audits specifically related to certain manufacturers, certain suppliers, which is why I mentioned before, how well do you know your suppliers. Right? Just because you may be compliant, on your import side doesn't necessarily mean that you are low risk in the eyes of CBP. If you are importing from certain suppliers that CBP knows there are issues of, or sees that there is a concern, that may flag your imports for additional review just because you're importing from that supplier. And I bring up trade on operations because if there is an issue with, the IEP refunds that they're seeing occurring a lot, they may set up additional operations to review those. And then focus assessments. Audit doesn't conduct too many of these anymore, but in general, this is the biggest audit you can possibly face where they conducted in at least three phases where they have a pre assessment survey, which is a risk assessment, assessment compliance testing where they actually test the issues, your internal controls, and then follow-up audits to make sure that you fix your internal controls. And follow-up audits can continue over and over until you actually fix the issue and prove that your internal controls are sufficient. And then other methods, I just put a very general investigation. Most importers don't face this, but in case there are bad actors, with high loss of revenue, you may be subject to, investigation by Homeland Security investigations, criminal investigations for fraud, but that's not necessarily relevant relevant to everyone. And then last, FP and F, in the case that there are issues that they've confirmed, you may be subject to penalties. But, of course, FP and F in general, they like to give you a lot of leeway. So there is potential for mitigation, which brings me to the next section. What's the big takeaway? Right? Now that I've scared everyone with what customs does, what can importers do to prepare? Right? There's a lot of things that you can do to mitigate your risk and to show that you are compliant, which customs does, take that into account. Everything that, is conducted, is kept in customs history. So any validation actions, any enforcement actions, customs maintains a history for your importer as well as, they track it for suppliers as well. So whenever we conduct audits, we always conduct a background investigation on the importer, on the suppliers, to see if there's a history. Right? Have you had twenty thirty c f 20 eights and 20 nines issued within the past year? If so, you're generally ranked as a higher risk because now we probably can't trust your records. Right? Because you have a recent history of issues. And then again, what kind of issues are they? Are the c f twenty eight and twenty nine related to value classification? So those are the things that we consider whenever we look at importers. So compliance is a mitigating factor. You wanna be compliant as much as possible before it reaches customs hands because whenever we do, our review, if we see that you've been compliant, we don't have any issues. The there are no c f 20 nines or enforcement, no audits. You're at lower risk from that standpoint already. So with that being said, I recommend evaluating your internal import operations to identify high risk areas. So what kind of imports do you have? What kind of suppliers are you importing from? What areas are high risk? And when you've identified those high risk areas, audit them. See if there are any compliance gaps, and if they are, are they systemic or isolated? And systemic in the context of this, refers to recurring issues that may be due to policies, procedures, systems, or control failures. And then with isolated ones, those are just one off. Maybe the broker made a mistake. Maybe there was a mix up with documentation. Right? And then correct any compliance issues. You wanna make sure that these issues are resolved so that customs doesn't look at this and say, hey. You have all these issues. You wanna put your best foot forward and maintain compliance so that when customs does look at your, imports, they'll know, hey. They've been compliant this whole time. And in the context of FP and F, if you have penalties, they consider your history, and they may mitigate more. Now confirming, you want also confirm compliance for record keeping requirements. Make sure your records are available in case CBP request documentation. So we've had situation before where you see if you request information and the important record can't produce the documents in time. Do not underestimate how many records customs can request. We've had situations before where we requested a load of records for only 10 entries. But whenever we received the response at the last moment, the records for those 10 entries was over a thousand pages long because they needed to request a lot of manufacturing records from the supplier. And the supplier kept them in cardboard boxes locked up in a room on the side of the warehouse. So it took them a very long time. So make sure that you are ready in case you request documents. And then, of course, review your records for accuracy and consistency. Make sure it passes the smell test because if it doesn't pass the smell test, customs will ask questions. So make sure they're accurate. Make sure they're consistent. So at least if customs conducts a smell test smell test, there's a good chance that you will, pass their compliance test, and not receive any more enforcement actions. So Tim will be covering the next section here, and so I'll pass it off to Tim.

Tim Vorderstrasse

Alright. So we're gonna dive into drawback in the IEPO tariff refund era. We're in a interesting place right now. There's there's a lot going on. Right? If you, if you, file a recon, if you're doing drawback, you know, we're kind of pushed to the end of the line a little bit on some of these, CAPE processes. Those features are gonna have to come at some point, but just calling out, you know, even claiming a single penny on a particular entry line that has IEPA, regardless of if you're claiming drawback on the IEPA tariff itself or something else, renders that entire entry not eligible for phase one of cape. On top of that, right, the expectation is that there's gonna be an opportunity for, for lack of a better word, reconciliation of what was imported and duty paid and what was ultimately claimed for drawback on IIPA and what is left. The the challenge there is if you, as a drawback provider, as a drawback claimant, there is one duty value. Well, technically, two. There's calculated and claimable or even adjusted. But, essentially, there's one duty value. It's not broken out by by HTS on or a tariff, on an entry line, which means that there is no, way for customs within their system to determine how much of a particular tariff was claimed. So you would think, alright. So at least my drawback broker has it. In a lot of cases, it it is possible, but most drawbacks, especially the the legacy systems, they also have a single, duty value, a single combined do rate of duty. There are times where they have two, but I I just wanna call out. If you have claimed on IEPAs, there's gonna be some type of process that's needed. If you are one of our draw back customers, we don't we have that split out. We already have all that programming. We're ready to go once that goes live. But so if if you're not familiar with what drawback is, we're not gonna really dive into it here, but it's essentially a export incentive program that allows exporters to recover the import duties that they pay. Not every tariff is eligible, but if you're exporting or destroying, you likely have a drawback opportunity. And, drawback historically has been a a a nice to have, a good benefit that helps promote exports, helps offset some of the tariffs to help you compete. That's the whole point of it. And it's it's pivoted significantly into some, to more of a core, margin protection strategy. IEPA certainly opened up the door. I mean, three o ones even even before that opened up a lot of opportunity. IEPA opened up more opportunities for drawback. It became more feasible for and profitable for companies to start exploring drawback. And it also opened up manufacturing and petroleum drawback in areas where it might not have qualified before because those provisions require, imports to be duty paid in order to to claim that. So then, you know, you have all these companies taking advantage of drawback, and next thing you know, Supreme Court strikes that down. And CBP responds, in turn and creates the CAPE system. So now here's where we are. Right? As as Tan mentioned earlier, there's, some risks with the $48.11. CAPE refunds should go to the importer. In most cases, it will go to the importer. But a lot of companies, right, shifted to DDP. So the the entity who ultimately bore the cost of the tariffs ultimately is not really a party to the transaction as it relates to the the cape refund, the the refund. So there there's ways for 48 elevens to be utilized, and that, of course, sounds great. But as as Tan mentioned, there is a two step process. You need to be a notified party. You can do that through the paper or PDF based forty eleven, or you can assign get assigned in ACE. Or if you have cross account access and they give you appropriate access and you're the top account owner, you can actually assign access as well to yourself or a notify become a notified party. And then you'd be able to then you'd be really associated with that importer. The additional step is the harder step, and that is that you're going to need to be a party listed as the notified party on each individual import that you intend to to claim back, through IIPA. So that presents a significant hurdle as well. So drawback. Right? I'm not saying so basically, the drawback, allows you to to kinda consolidate a lot of things. And your your the refund that you get, there's more control. There's one transaction that is triggering the refund. You have more control over where it's going. So AIPA, right, you you get a 100%. You you'll also get, you know, interest. It's a great way to go, but one thing to consider is, you know, if you're not really sure where the money is going, drawback might be something that you wanna consider. You know, with with, CAPE, right, their v one is allowing you to to file anything that's unliquidated, anything that has liquidated within eighty days. So that includes the eightieth day. I saw some questions about that. Does not so day 81 and beyond is not gonna be included in in in Cape, at least in v one, probably not later either. But, and re entries filed for recon and and those types of things. So in those cases, those, those features are gonna come later. They're gonna have to. Right? So if if you want the money now on anything that has been flagged for recon, and it's not very likely that you have I mean, some companies have, filed recon on some of these entries that have AIPA. But in the in the case that actually makes it worse. Right? You need to file that recon and then get that get that processed. But, any any entry where AIPA is paid, those are not gonna be paid out or processed at least in this version of CAPE if they're flagged for recon. With drawback, as soon as you file that recon, entry, you can go ahead and file for that refund through drawback. Right? That's that's the main difference. I'm gonna kinda speed it up because I wanna leave time for some of these great questions. And, right, there's gonna be an administrative hurdle. This is gonna be a big process. You're gonna have to flag all these entries in various stages. You're gonna do some math on, liquidation date plus 80. Is that on or before, you know, is that on or before today's date, that kind of thing. And then tracking, did it get accepted? Did it get paid? What step in the process is it? Those types of administrative hurdles are certainly a reality. And when you're doing that across all those different, entries, which you know, you can submit, you know, one less than 10,000 entries on a single AIPA upload into Cape. It becomes a lot of different things to manage, whereas drawback is just one transaction. So a lot of companies are in various stages here. We have clients that are doing all three or not one company doing all three, but we have companies that are doing all three. So option a is you can file for, drawback on everything. Just include it all. You're gonna get all of that back, and, eventually, there's gonna be reconciliation, in in one way, shape, or form. Other companies are saying, you know what? File file for those entries, but hold the IEPA tariffs, and we know there's gonna be a process, and then that's gonna get paid out late later. We're seeing a lot of that, especially. That allows you to retain a 100% of that that IEPA refund while still allowing that continuous cash flow that you've benefited from from that ongoing drawback program. Also, a lot of companies are doing this one, hold off entirely. You know? Get get the data together. You're gonna need it for for Cape. Put it all together. Get the claims ready, but don't file it. Let's get the Cape stuff going. Let's understand what that top payment timeline is. And once that's kinda done, we can go ahead and proceed with with drawback once we have some clarity. So we're running quickly out of time. I'm gonna go to the resources. You know, I I wanna just say, that on the top right of your screen, there is the audit your customs broker. It helps you to, you know, kinda identify, entries that that might have some risk and and where there might be overpayment of or underpayment of of duties. We we help to automate and make those, to audit and to make those corrections even if those entries were filed by another broker. We have some great tools online. Hopefully, you've already used our refund calculator, our tariff simulator to refund calculator to see how much AIPA you could be getting back and our tariff simulator to to kinda identify what's going on in the world with regard to your products and what you need to be thinking about. If you wanna get in contact with us, our contact information is over there, classification@flexsport.com for classification and duty rate information, and trade advisory services, drawback, customs brokerage, all of that. That's handled by our customsbd@flexsport.comteam. With that, we're gonna dive right into the questions. And, Tam, I'm gonna ask you to come back on screen, and we'll we'll start answering some of these questions.

Thanh Nguyen

Alright.

Tim Vorderstrasse

Awesome.

Thanh Nguyen

So first question. Can a nonresident importer get an ACE portal and collect their refunds? And the answer is yes. Nonresident importers can set up an ACE account, but refunds can only be issued with US bank accounts. So if you are a nonresident importer, make sure to work with your broker, to set up the USACH bank account, to receive refunds. And if needed, file your 48 elevens to designate your notified parties. Is Flexport adjusting to manage a refund refunds in light of cape? Yes. So talk to your account executive. They'll work with you to determine the best option, the best, cost, for managing the refunds. In the case that an entry, on the date of 04/20 when CAPE is released, if the entry is right on the eighty days, should you file it and can you file it? So CAPE will conduct the initial data validations. So I recommend just filing it. If CAPE accepts it, you're good to go. In the case that it falls outside of the range or it it's type of entry that is not covered in phase one capable of rejected. In which case, you may need you need to may need to wait for phase two to file that entry.

Tim Vorderstrasse

Yeah. So the way that it's worded is it includes the eightieth day.

Thanh Nguyen

Mhmm.

Tim Vorderstrasse

That's we're assuming they programmed the way that they they they worded it. And, you know, it if you file all 9999 and there's, you know, ten fifteen rejected, those ten and fifteen are gonna be rejected. The rest of the file is is being accepted. So and then there's gonna be a link that will show you what was rejected, what the reason was, and then you'll be able to to to address that, or you'll be able to track that. Okay. So there there was another question. If, the importer has multiple brokers, are they able to still file under one single entry? It has to be done by the broker who cleared the entry. So that's a great question. If you are the importer of record, you can file, into your ACE portal. I saw another question, come by earlier that was like, where is this? We'll get into that, I think, in a second as well. But you can go ahead and upload for all of your entries across all brokers, but it has to be done at an IOR level. That means all the digits, even those last two. So your EIN plus those last two. So if you only set up one importer account for one of your IORs and you have multiple, you're gonna have to go, and soon soon go in and submit, applications for that. But you as a broker as a as a as an importer can do it across all brokers. If I, not me, but if we, as a broker, were to file it in our brokerage account, we would only be able to do the the entries that we cleared. So they're gonna look for those first three digits and make sure that it matches. That's your file code. They're gonna make sure they it matches ours. If a so, Tan, this one's for you. If an importer is filing cape on their own behalf, is a form forty eleven required in the ACE portal?

Thanh Nguyen

So forty eight eleven is not required unless you wanna designate another party to receive your refunds. So if you already have your own US ACH account set up in ACE, for refunds, you're good to go as long as you are okay with refunds going into that account, into that, designated party already. But if you want someone else to receive it, you need to file for 08/11.

Tim Vorderstrasse

And be a notified party on the transaction. Yeah. Right? You gotta remember the the two step process. When signing a forty eleven for IEPO refunds, is it possible to exclude PSC recons or drawback refunds? So there there that's a great question. Again, it's a two step process, and just assigning somebody a notify as a notified party doesn't do a do a thing. It just connects them to you. Then you need them to be on the transaction. So there is that level of protection, but, also, there are different, tiers. There's bill refunds and notice liquidations, refunds and drawback only, and there's a handful of others. So there are different categories and limitations that you can apply by the type of notified party that you elect them to be. Question for you. Is there specific instructions for what is needed for validation of entries?

Thanh Nguyen

it's just referring to, customs validating entries in general, I'm assuming. So in the case that customs is conducting an additional validation actions, you wanna make sure that you can, that you respond to the request as best as you can. So, for example, if they issue a c f 28, respond to everything, provide them everything that they need. If they ask for translations, do so, and then provide them a good narrative. Explain everything from beginning to end. And if there is something you're referring to in your narrative that is not included in the documents, make sure to include the documents even if they're not asking for that specifically. Because if customs is confused with anything or if there's missing information, they're gonna come back and ask more questions and ask more questions. And in certain circumstances, we see an incomplete response being provided. Customs may reject your declaration entirely. So free trade agreements, for example. We have situations where translations were being provided and certain documents were being provided. And then see the c f 20 I n was just issued anyways, and they just removed the free trade agreement, claim because they didn't have documents. So you wanna make sure provide as much as you can put your best foot forward as soon as you can to prevent additional questions.

Tim Vorderstrasse

Alright. We're I know we're at time. I I think there's two more great questions. What if we have partially claimed that you pay on some of these entries due to reexport? I'm assuming that at that point, partially claimed means drawback. If there is still a balance, we submit the full information. So at at this point, if, you know, if there was a single penny claimed on drawback on an entry, even if it's on one entry line and it's not the AIPA tariff, that entire entry is not part of cape v one. And for you and then we'll we'll have to close out here. Just to confirm, importers will not automatically be refunded. They must submit their entries in order to get a refund. That was the question.

Thanh Nguyen

Oh, yes. You must submit it within cape, and you must have ACH account set up and everything. So make sure that your ACE account, US Bank account is set up because if you don't submit all this information, the customs will hold refunds. In the case that you do submit a cape decoration but don't have your ACH set up, they specifically stated refunds will be held until there is, an account set up. So you wanna make sure to submit cape and make sure your, administrative tasks are all, checked off.

Tim Vorderstrasse

Absolutely. Go into Ace. Look at the look bring in that liquidation date. Add eighty days. And if that is on or after 04/20, you're gonna be in good shape. There's other considerations, of course, but, we'll we'll have to close out of here, Tim.

Alright. So

Thanh Nguyen

And that concludes today's webinar. We'll email everyone a link to the recording tomorrow morning, and thank you everyone for attending today's webinar, and have a great day.