Drawback Privileges: Four Ways To Simplify Your Tariff Refund Process

What are Drawback Privileges?

For importers and exporters seeking to maximize their duty refunds, understanding and obtaining the right privileges from CBP is essential. These regulatory accommodations can transform your drawback process from cumbersome to efficient. Below, we explore the four distinct privileges that companies can apply for:

1. Waiver of Prior Notice (WPN) allows exporters to bypass notifying CBP before each export or destruction. Without this privilege, drawback claimants must notify CBP of the intent to export or destroy at least 5 days prior to date of export or destruction using Customs Form 7553.
2. One-Time Waiver of Prior Notice is a single-use version of the WPN privilege, which applies to exports that have already occurred and where the drawback claimant did not provide advance notice of intent to export or destroy. As the name suggests, this privilege can only be granted once.
3. Accelerated Payment enables claimants to receive refunds within weeks instead of years. Without the Accelerated Payment privilege, drawback claims are paid at liquidation, which can happen up to four years after the date the claim was filed. A drawback bond is required for use of the Accelerated Payment privilege.
4. The Drawback Compliance Program offers benefits to companies with robust internal controls. Benefits may include reduced penalties or warning letters if they make minor errors.

How to Apply for Drawback Privileges

To apply for drawback privileges, follow these steps:

• Prepare a written application detailing your company's drawback program.
  • Upon request, CBP will provide you with a copy of a sample application to assist you in preparing your application.
  • You can also refer to CFR Title 19 Part 190, Subpart I for a list of items that must be included in the application.
• Submit the application to the drawback office where you'll file claims.
• Include essential information such as:
  • Company name and address
  • IRS number
  • Identity of the person responsible for the drawback program
  • Description of intended bond coverage
• Provide a certification of compliance with all statutory and regulatory drawback requirements.
• Submit a detailed description of your drawback program, including sample documents for each privilege for which you are applying. If applying for multiple privileges, a separate set of trace documents should be provided for each one.

CBP will review your application, potentially request additional information, and then make a decision based on your submission and transaction history.

What Documents are Needed

Sample documents are required for each privilege for which you are applying. Applicants must provide a sample of the documents that will be maintained to show compliance with drawback laws and regulations. Specific documents needed will vary depending on the privilege. Below is a list of common documents needed to support an application.

1. Import Records
   • Import purchase orders
   • Commercial invoices
   • Entry Summary (Form CS 7501)
   • Packing List
2. Export Records
   • Export sales orders
   • Proof of export documentation
   • Packing List
   • Export Invoices
   • Electronic Export Information (if required)
3. Inventory Records
   • Warehouse receipts
   • Inventory receipts and withdrawal records
4. Manufacturing Records (for manufacturing drawback)
   • Bills of material
   • Waste records
   • Production records
5. Destruction Records (for destruction claims)
   • Third-party proof of destruction (if applicable)
6. Additional Documents
   • Evidence of transfer (if transferred between multiple parties)
   • 214 Forms (for FTZ withdrawals for consumption)
   • Excise tax documents (If claiming excise tax)

Remember to keep these documents for at least three years after claim liquidation.

By understanding drawback privileges, following the application process, and maintaining all the necessary documentation, you can simplify your duty drawback process and potentially receive substantial tariff refunds.

Always consult with a drawback specialist or CBP for the most up-to-date requirements and guidance. Schedule a discovery session with Pax to find out how we can help streamline your drawback procedure.