On February 24, 2018, there will be additional changes to the duty drawback time frames with regard to Record Keeping due to the Trade Facilitation and Trade Enforcement Act of 2015 (i.e. TFTEA) being passed into law.
The Current Drawback Time Frame for Record Keeping is as shown in the first two diagrams below. A drawback claimant must keep all records related to a drawback claim for three years after the duty refund payment was received. Due to the length of time records must be maintained, we encourage all of our drawback clients to apply for Accelerated Payment approval. Once Accelerated Payment privileges are approved, a drawback claimant will receive their duty refunds within approximately 30 days after filing the drawback claim. Upon receipt of their duty refund, the drawback claimant must maintain all of the records for an additional three years. This record keeping time frame would be much longer without the benefit of accelerated payment approval.
Unused Merchandise Drawback
The diagram below shows the current record keeping time frames for Unused Merchandise Drawback. Those time frames mandate that the drawback claimant must keep the drawback records for a maximum of 9 years and 30 days. This time is made up of a maximum of 3 years from the date of the earliest import used on the drawback claim to the export date of the oldest export used on the claim. In addition, these records must be kept for 3 years from export to filing a drawback claim, 30 days from the date the claim is filed until the duty refund is received (i.e. with accelerated payment approval) and another 3 years after the drawback claim is paid.
Manufacturing Drawback
For Manufacturing Drawback (i.e. with accelerated payment approval) a drawback claimant currently must, per the diagram below, keep all related records for a maximum of 11 years and 30 days. The claimant must keep these records for a maximum of 5 years from the date of the earliest import used on the drawback claim to the export date of the oldest export used on the claim. These records must also be kept for an additional 3 years from the date of export to filing a drawback claim, 30 days from the date the claim is filed until the duty refund is received (i.e. with accelerated payment approval) and another 3 years after the drawback claim is paid.
Under the New Duty Drawback Law, beginning on February 24, 2018, the Drawback Time Frame related to Record Keeping will change as shown in the diagram below. Beginning on this day, records related to the drawback claim must be kept for 3 years from the date the drawback claim was liquidated by U.S. Customs and Border Protection (CBP). Although a duty drawback claim is automatically deemed liquidated one year after the date it was filed, CBP may request a one year extension if they have good cause. In fact, CBP may request a maximum of 3 of these extensions.
When the new law becomes effective, a drawback claimant will have to keep records related to the drawback claim for a maximum of 12 years. This is the same for both Unused Merchandise Drawback as well as Manufacturing Drawback (i.e. with accelerated approval). These 12 years are made up of the following: 5 years from import to filing a drawback claim, a variable amount of years (1 year to 4 years) for the liquidation of the drawback claim and another 3 years from the date the claim was liquidated.
Please return to our website in the next few weeks for additional updates on the changes to duty drawback due to the New Duty Drawback Law.
