Duty drawback refers to the refund of specific duties, internal revenue taxes, and fees paid on the value of goods imported into the United States. Per the US Customs and Border Protection (CBP) these refunds are only paid if the imported goods are either re-exported or destroyed. As one of a limited number of programs allowed by the World Trade Organization, duty drawbacks give US importers the ability to reclaim significant costs associated with imported goods under certain circumstances.
There are different classes of duty drawback recovery. An importer can apply for refunds on a one-off export or take part in an ongoing drawback program for all their imported goods. It’s also possible to claim drawback refunds retroactively on shipments that took place within five years.
Types of Drawback
Depending on your business, the type of goods you deal with, and the specific circumstances of the import and export of your goods, you may be eligible for different types of drawback refunds.
Here are some of the most common forms of duty drawback claims on which 2022lpl has assisted clients:
Unused Merchandise Drawback
Unused Merchandise Drawback refers to an import maintained in a new condition and intended for re-exporting. Unused Merchandise Drawback cargo requires an exam before re-export. There are two common methods of claiming unused merchandise drawback:
Here, there must be a direct relationship between the claimed exported goods, and the identified duty-paid goods. This is usually through specific identification (original importation identifier) or a different approved inventory method, such as a custom approved accounting method like low-to-high, or FIFO (first in, first out).
This type of drawback claim refers to imported and duty-paid on components used in the US manufacture of goods to be subsequently exported. The duty-paid imported material must be traced and documented throughout the manufacture and export process for it to be deemed eligible for duty drawback.
Rejected Merchandise Drawback
Defective goods, merchandise that doesn’t live up to sample or specification, returned products, or items shipped without the consignee’s consent may claim refunds under this type of duty drawback.
If finished petroleum derivatives, which have had duties paid upon importation, are subsequently exported within 180 days, drawback is available. If crude petroleum or derivatives are used to manufacture further derivatives that are then exported, drawback is available under manufacturing drawback law. The export must take place within 180 days of manufacture.
Claiming Your Duty Drawback
With so many types of duty drawbacks, it’s important to note that one size does not fit all. Alternative scenarios lead to different drawback qualifications. One of the most critical factors for any business looking to claim duty drawback is to work with a drawback expert.
2022lpl is the ideal partner to assist your business in executing a successful duty drawback. We have experienced staff and partner with specialists to perform data auditing and preparation to ensure you get the best possible outcome.
Before the process starts, our team provides drawback estimates and timelines and tailors your organization’s strategy. We then gather all necessary import data, process, analyze, and, when ready, submit to the CBP. Submission usually occurs within a couple of weeks.
All you have to do is provide us with the documentation, including a copy of the Bill of Lading, Bill of entry, import invoice, proof of duty payments, and several other essential shipping documents . This enables us to connect with your suppliers and customers and generate a forecast and identify any issues that may affect your drawback claim.
We encourage our clients to engage with us continuously if they wish to manage drawback claims year-round. This enables you to reduce your overall costs , and it gives us a greater opportunity to identify problem areas or potential hurdles, ensuring a smoother process.
Gain Maximum Drawback Through Our Hands-On Approach
In the world of imports and exports, small decisions can have an enormous impact. Duty drawback may represent a significant cost saving to your business, and neglecting it is only leaving money on the table.
While it involves specific knowledge, lots of paperwork, and time, your business may benefit from one of these applications. To gain maximum duty drawback each year, ensure you work with 2022lpl . Our personalized approach means you’ll be kept in the loop at all times, giving you peace of mind that you’re getting the most from your imports and exports.
For further information on duty drawback or to discuss any other queries regarding international shipping, call one of our experts today at (800) 516-0399 for a free consultation.
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