[Federal Register Volume 64, Number 202 (Wednesday, October 20, 1999)]
[Rules and Regulations]
[Pages 56433-56441]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-26882]
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DEPARTMENT OF THE TREASURY
Customs Service
19 CFR Parts 24, 159 and 174
[T.D. 99-75]
RIN 1515-AB76
Interest on Underpayments and Overpayments of Customs Duties,
Taxes, Fees and Interest
AGENCY: U.S. Customs Service, Department of the Treasury.
ACTION: Interim rule.
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SUMMARY: This document conforms the Customs Regulations to existing
statutory provisions and judicial precedent regarding the assessment of
interest due to underpayments or overpayments to Customs of duties,
taxes and fees pertaining to imported merchandise, including interest
thereon. The majority of the conforming changes reflect the terms of
section 505 of the Tariff Act of 1930 (19 U.S.C. 1505), as amended by
section 642(a) within the Customs Modernization provisions of the North
American Free Trade Agreement Implementation Act. Under that statute,
interest accrues initially from the date the duties, taxes, fees and
interest are deposited with Customs in the case of overpayments, or are
required to be deposited with Customs in the case of underpayments, but
in either case not beyond the date of liquidation or reliquidation of
the applicable entry or reconciliation. Also under the statute and
applicable judicial precedent, all bills issued by Customs for
underpayments of duties, taxes, fees and interest are due within 15 or
30 days of issuance. In addition, the document conforms the Customs
Regulations to other changes to 19 U.S.C. 1505 and to section 321 of
the Tariff Act of 1930 (19 U.S.C. 1321) regarding interest that were
made by sections 2(a) and 3(a)(12) of the Miscellaneous Trade and
Technical Corrections Act of 1996.
DATES: Interim rule effective October 20, 1999. Comments must be
received on or before December 20, 1999.
ADDRESSES: Written comments (preferably in triplicate) may be addressed
to the Regulations Branch, Office of Regulations and Rulings, U.S.
Customs Service, 1300 Pennsylvania Avenue, N.W., Washington, D.C.
20229. Comments submitted may be inspected at the Regulations Branch,
Office of Regulations and Rulings, U.S. Customs Service 1300
Pennsylvania Avenue, N.W., 3rd Floor, Washington, D.C.
FOR FURTHER INFORMATION CONTACT: Robert Reiley, Financial Management
Division (202-927-1504).
SUPPLEMENTARY INFORMATION:
Background
Present Regulatory Provisions
The regulatory provisions amended by this document are as follows:
Section 24.1 of the Customs Regulations (19 CFR 24.1) sets forth
general procedures governing the collection of ``Customs duties, taxes,
and other charges,'' including the permissible methods of payment.
Section 24.3 of the Customs Regulations (19 CFR 24.3) sets forth
general provisions regarding the rendering and payment of bills or
accounts for money due the United States and the issuance of receipts
therefor. Paragraph (e) of that section provides that (1) a bill for
increased or additional duties determined to be due upon a liquidation
or reliquidation is due 15 days from the date of such liquidation or
reliquidation and (2) all other bills are due and payable upon the bill
date appearing on the bill.
[[Page 56434]]
Section 24.3a of the Customs Regulations (19 CFR 24.3a) contains
detailed provisions regarding Customs bills for supplemental duties
(increased or additional duties assessed upon liquidation or
reliquidation), reimbursable services, and miscellaneous amounts (bills
other than duties, taxes, reimbursable services, liquidated damages,
fines, and penalties), including interest thereon.
Section 24.11 of the Customs Regulations (19 CFR 24.11) concerns
the issuance of bills for ``increased or additional duties or taxes
found due upon liquidation'' and provides for issuance of such bills to
the importer of record or, in certain circumstances, to the actual
owner.
Section 24.25 of the Customs Regulations (19 CFR 24.25) concerns
statement processing and automated clearinghouse filing and payment
procedures and, in the second sentence of paragraph (a), refers to a
single payment of ``duties, taxes and fees.''
Section 24.36 of the Customs Regulations (19 CFR 24.36) concerns
refunds of excessive duties or taxes, and paragraph (a) thereof
specifically provides for preparation of a refund ``[w]hen it is found
on liquidation or reliquidation of an entry that a refund of excessive
duties or taxes, or both, is due.''
Section 159.6 of the Customs Regulations (19 CFR 159.6) concerns
the treatment by Customs of differences of less than $20 and $20 or
more, between estimated deposits and amounts assessed on liquidation.
This section specifically refers in these contexts to ``duties, fees,
and taxes'' or to ``duties and fees and internal revenue taxes.''
Section 174.11 of the Customs Regulations (19 CFR 174.11) sets
forth the matters that may be the subject of an administrative protest.
Paragraph (c) of that section specifically refers to ``charges or
exactions'' of whatever character within the jurisdiction of the
Secretary of the Treasury.
Section 174.12 of the Customs Regulations (19 CFR 174.12) sets
forth the procedures for filing a protest. Paragraph (a)(2) of that
section provides that a protest may be filed by any person ``paying any
charge or exaction.''
Customs Modernization Statutory Changes
The Customs Modernization provisions contained in Title VI of the
North American Free Trade Agreement Implementation Act (``the Act''),
Public Law 103-182, 107 Stat. 2057, included, in section 642(a), an
extensive amendment of section 505 of the Tariff Act of 1930 (19 U.S.C.
1505). Prior to this amendment, section 505 consisted of three
subsections covering the deposit of estimated duties (subsection (a)),
the collection of increased or additional duties and the refund of
excess duties deposited as determined on a liquidation or reliquidation
(subsection (b)), and the due date for duties determined to be due upon
liquidation or reliquidation, delinquency, and interest on delinquent
duty payments (subsection (c)). Section 505, as amended by section
642(a) of the Act, now contains the following provisions:
1. Subsection (a) of amended section 505 requires the importer of
record to deposit with Customs, at the time of making entry or at such
later time as the Secretary of the Treasury may prescribe by
regulation, the amount of duties ``and fees'' estimated to be payable
on the entry. In addition, subsection (a) now provides (1) that the
regulations prescribed by the Secretary may provide that estimated
duties and fees shall be deposited before or at the time an import
activity summary statement is filed and (2) that if an import activity
summary statement is filed, the estimated duties and fees shall be
deposited together with interest, at a rate determined by the Secretary
of the Treasury, accruing from the first date of the month the
statement is required to be filed until the date such statement is
actually filed. (An import activity summary statement is a filing
procedure provided for in section 484 of the Tariff Act of 1930, as
amended [19 U.S.C. 1484], and was added by section 637(a) of the Act to
permit the filing of a single statement, covering entry or warehouse
withdrawal transactions made during a calendar month, within such time
period as prescribed by the Secretary of the Treasury by regulation but
not later than the 20th day following such calendar month.
Implementation of the import activity summary statement procedure will
be the subject of a separate regulatory action and thus is not dealt
with in this document.) Thus, in order to avoid a potential conflict
with the import activity summary statement procedure, subsection (a),
as amended, no longer contains a 30-day limitation on the authority of
the Secretary of the Treasury to prescribe by regulation for the
deposit of estimated duties after the date of entry.
2. Subsection (b) of amended section 505 requires Customs to
collect any increased or additional duties ``and fees due, together
with interest thereon,'' and to ``refund any excess moneys deposited,
together with interest thereon,'' as determined on a liquidation or
reliquidation. In addition, subsection (b) now provides (1) that
duties, fees, and interest determined to be due upon liquidation or
reliquidation are due 30 days after issuance of the bill for payment
and (2) that refunds of excess moneys deposited, together with interest
thereon, shall be paid within 30 days of liquidation or reliquidation.
Thus, in addition to the inclusion of new references to the collection
of fees and interest, to the refund of excess ``moneys'' (which would
include fees) and interest thereon, and to a due date based on the
issuance of a bill, section 505, as amended, prescribes a specific time
limit for the payment of refunds and no longer provides that duties
determined to be due upon liquidation or reliquidation shall be due 15
days after the date of that liquidation or reliquidation (see also the
discussion of subsection (d) below).
3. Subsection (c) of amended section 505 is essentially new and
provides (1) that interest assessed due to an underpayment of duties,
fees, or interest shall accrue, at a rate determined by the Secretary
of the Treasury, from the date the importer of record is required to
deposit estimated duties, fees, and interest to the date of liquidation
or reliquidation of the applicable entry or reconciliation and (2) that
interest on excess moneys deposited shall accrue, at a rate determined
by the Secretary of the Treasury, from the date the importer of record
deposits estimated duties, fees, and interest to the date of
liquidation or reliquidation of the applicable entry or reconciliation.
(Reconciliation is a procedure provided for in section 484 of the
Tariff Act of 1930, as amended [19 U.S.C. 1484], and was added by
section 637(a) of the Act to allow elements of an electronic entry
summary or electronic import activity summary statement [other than
those elements related to the admissibility of the merchandise], if
undetermined at the time the summary or statement is filed, to be
provided to Customs at a later time. Reconciliation will be implemented
by separate regulatory action and thus is not substantively addressed
in this document.) Thus, the importer of record is liable for interest
on underpaid amounts from the date those amounts should have been paid
to Customs, and, conversely, the importer of record is entitled to
interest on refunds of payments made to Customs in excess of the amount
properly due.
4. Finally, subsection (d) of amended section 505 provides (1) that
if duties, fees, and interest determined to be due or refunded are not
paid in full within the 30-day period specified in subsection (b), any
unpaid balance shall be considered delinquent and bear
[[Page 56435]]
interest by 30-day periods, at a rate determined by the Secretary of
the Treasury, from the date of liquidation or reliquidation until the
full balance is paid and (2) that no interest shall accrue during the
30-day period in which payment is actually made. In addition,
subsection (d) of amended section 505 reflects the terms of present
Sec. 24.3a(c)(3) of the regulations in that it provides for a 30-day
period for payment both before and once a delinquency occurs, during
which period no additional interest (that is, on any outstanding
principal amount, plus interest thereon) will accrue so long as full
payment of the amount outstanding is made during that current 30-day
period. Thus, section 505 no longer allows for delinquency and interest
accrual only after 45 days following liquidation or reliquidation. This
is because the statutory delinquency period is now 30 days and because
under the statute initial interest accrual on underpayments runs from
the date of required deposit of moneys rather than only when a
delinquency has occurred.
Customs has determined that the changes to section 505 effected by
section 642(a) of the Act as described above require a number of
conforming changes to the provisions of Secs. 24.1, 24.3, 24.3a, 24.11,
24.25 and 24.36 of the regulations. These changes, which are explained
in more detail below, concern principally the inclusion of references
to the following: the collection or deposit of (estimated) fees and
interest; the collection of increased or additional fees; the refund of
excess fees deposited; the accrual of interest on underpaid and
overpaid duties, fees and interest from the date of required (including
actual) deposit to the date of liquidation or reliquidation and the
collection or refund of such accrued interest; and the 30-day due date
periods for payments or refunds of underpaid or overpaid duties, fees
and interest as determined on liquidation or reliquidation. In
addition, some of these regulatory provisions, as well as Secs. 174.11
and 174.12 of the regulations, are in need of additional wording
changes, involving principally the addition of references to
``interest'' or ``taxes'' or ``refunds,'' in order to conform the
regulatory texts to the principles reflected in applicable judicial
decisions; these changes are also explained in more detail below.
Additional Statutory Changes Regarding Interest
Subsequent to the changes to section 505 effected by section 642(a)
of the Act as discussed above, additional statutory changes regarding
interest were enacted as part of the Miscellaneous Trade and Technical
Corrections Act of 1996 (``the Miscellaneous Act''), Public Law 104-
295, 110 Stat. 3514. These statutory changes, which require conforming
regulatory changes, were as follows:
1. Section 2(a) of the Miscellaneous Act amended section 505(c) to
provide that, in the case of a claim under 19 U.S.C. 1520(d) (that is,
a NAFTA post-importation claim for a refund of duty), interest on the
excess money deposited shall accrue from the date on which the claim is
made; under section 2(b) of the Miscellaneous Act, the section 2(a)
amendment applies to claims made on or after June 7, 1996. Since this
statutory amendment relates only to interest on excess deposits,
Customs believes that it should be reflected in the Sec. 24.36 refund
provisions.
2. Section 3(a)(12) of the Miscellaneous Act amended section 321(a)
of the Tariff Act of 1930 (19 U.S.C. 1321(a)) by the addition of
several references to ``interest.'' The addition of these references
extends the authority of the Secretary of the Treasury to include
interest in determining what is a de minimis amount when providing by
regulation for waiving the collection of de minimis amounts on entered
merchandise and for disregarding de minimis differences between the
total estimated deposit or tentatively assessed amount and the total
amount actually accruing on an entry of merchandise; under section 3(b)
of the Miscellaneous Act, the section 3(a)(12) amendments apply as of
December 8, 1993. Customs believes that the statutory amendment
pertaining to the disregarding of differences between the total
estimated deposit or tentatively assessed amount (that is, of duties,
fees, and taxes) and the total amount (of duties, fees, taxes, and
interest) actually accruing (which is normally determined upon
liquidation of the entry) should be reflected in Sec. 159.6 of the
regulations which implements this aspect of the section 321(a)
provisions.
Explanation of Amendments
The specific regulatory amendments set forth in this document are
explained in more detail below.
Section 24.1
The amendments to Sec. 24.1 involve the addition of references to
``fees'' and ``interest'' in various paragraphs under the section. This
is simply intended to reflect the inclusion of these terms in the text
of section 505 as amended by section 642(a) of the Act. Since Sec. 24.1
sets forth general rules for collection (including payment method) of
funds due Customs and thus covers both initial payments and
supplemental payments pursuant to a bill issued by Customs, the added
``interest'' references are intended to cover (1) any interest that may
be initially due on estimated duties and fees under the import activity
summary statement procedure mentioned above to be implemented later and
(2) any interest assessed on underpayments and delinquent payments of
principal amounts and interest thereon under Sec. 24.3a. However, no
reference to ``interest'' has been added in paragraph (a)(7) of
Sec. 24.1 because this paragraph concerns initial credit or charge card
payments on non-commercial transactions, which would never involve an
interest payment.
Section 24.3
The first sentence of Sec. 24.3(b) is amended by adding references
to the payment of estimated ``fees'' and ``interest'' in order to align
the text on the terminology used in amended section 505. The words ``if
applicable'' have been included after the added ``interest'' reference
in recognition of the fact that interest would be required in an
estimated payment circumstance only in some cases. A reference to the
payment of estimated ``taxes'' has also been added to this regulatory
text in order to reflect the fact that Customs collects taxes (e.g.
harbor maintenance taxes) at the time of entry as part of the entry/
liquidation process. Prior to the United States Supreme Court decision
in United States Shoe Corp. v. United States, 118 S. Ct. 1290 (1998),
Customs considered such harbor maintenance assessments to be ``fees.''
However, the Supreme Court held that such assessments are ``taxes.''
Since Customs continues to be required by law to collect such
assessments and other taxes, the regulations are being amended to
reflect accurately the fact that Customs collects taxes at entry.
In addition, the text of Sec. 24.3(e) has been revised. The text
revision involves the following changes: (1) in the first sentence, the
addition of references to bills for ``fees'' and ``interest'' and the
inclusion of a statement that bills are due and payable ``within 30
days of the date of issuance of the bill''; (2) the elimination of the
outdated second sentence (which provided that a bill for increased or
additional duties is due 15 days from the date of liquidation or
reliquidation); and (3) the inclusion of an exception for bills
resulting from dishonored checks or from dishonored Automated
Clearinghouse (ACH) transactions, for which the revised text prescribes
a 15-day bill payment period
[[Page 56436]]
(see also the changes to Sec. 24.3a regarding debit vouchers as
discussed and set forth below). The last change reflects Customs'
practice of requiring that bills for dishonored checks or dishonored
ACH transactions be paid within 15 days of issuance of the bill.
Interest assessments on such dishonored payments are provided for in
the amendments to Sec. 24.3a and are authorized because there is no
statutory provision to the contrary. See Billings v. United States, 232
U.S. 261 (1914) and United States v. Goodman, 572 F. Supp. 1284 (CIT
1983).
Section 24.3a
In Sec. 24.3a, the paragraph (a) discussion of supplemental duties
has been modified to align on the terminology used in subsection (b) of
amended section 505 and to reflect the considerations regarding taxes
set forth above. Specifically, the words ``taxes and fees'' have been
included after ``duties'' in two places, the words ``increased or''
have been included before ``additional duties'' within the parentheses,
and the words ``together with interest thereon,'' have been included
after the parenthetical reference.
In addition, paragraph (b)(2) of Sec. 24.3a has been revised to
conform to the terms of amended section 505 regarding the accrual of
interest on underpayments of duties, fees, and interest. In the revised
text, paragraph (b)(2)(i), which concerns interest on initial
underpayments and relates to subsection (c) of section 505,
incorporates a number of illustrative examples and is further
subdivided into subparagraphs (A), (B) and (C) in order to cover
factual situations that arise under current Customs transaction
practices and that of necessity will result in variations in the
interest computation period under the basic statutory rule:
subparagraph (A) concerns pre-liquidation excessive refunds;
subparagraph (B) describes three scenarios involving pre-liquidation
additional deposits; and subparagraph (C) concerns cases in which
Customs receives a debit voucher indicating that a payment to Customs
was not made because of a dishonored check or ACH transaction.
Paragraph (b)(2)(ii) concerns interest on overdue bills and is based on
subsection (d) of section 505.
Section 24.11
Section 24.11 has been modified by removing former paragraph (b)
which affected only internal Customs procedures that are not
appropriate for regulatory treatment. In addition, the remaining text
(former paragraph (a)) has been simplified and references to increased
or additional ``fees'' and ``interest'' have been inserted in the text
and in the section heading.
Section 24.25
In Sec. 24.25, the second sentence of paragraph (a) has been
amended to reflect that interest may be due on a statement processing
transaction.
Section 24.36
Section 24.36 is amended by revising the first sentence of
paragraph (a), by adding a new sentence at the end of paragraph (a)
followed by new paragraphs (a)(1)-(a)(3), by making wording changes in
the first sentence of paragraph (b), and by making similar wording
changes in paragraph (c). These changes reflect the amended section 505
provisions regarding the refund of excess moneys deposited and thus
include the addition of references to the refund of excessive ``fees''
and ``interest'' and to the 30-day deadline for timely refunds, as
provided for in section 505(b). Similar to the approach taken in
Sec. 24.3a(b)(2)(i) as discussed above, the modified Sec. 24.36 text
incorporates a number of illustrative examples and sets forth several
scenarios, involving pre-liquidation additional excess deposits and
pre-liquidation refunds, that arise in practice and require variations
to the interest computation period under the basic statutory rule. The
modified Sec. 24.36 text also includes a specific reference to interest
accrual in the case of a claim for a refund filed under 19 U.S.C.
1520(d) and Subpart D of Part 181 of the Customs Regulations; this
change reflects the amendment to section 505(c) effected by section
2(a) of the Miscellaneous Act as discussed above. Finally, the changes
incorporate the 30-day interest period provisions for delinquent
refunds as provided for in section 505(d).
Section 159.6
A reference to ``interest'' has been added in each place where
reference is made to duties, fees, and taxes assessed or found due in a
liquidation or reliquidation context, to reflect the change to section
321(a) effected by section 3(a)(12) of the Miscellaneous Act as
discussed above.
Sections 174.11 and 174.12
In Sec. 174.11, a specific reference to the accrual of interest has
been added in paragraph (c) to reflect that interest is a charge or
exaction subject to protest within 90 days of the decision concerning
such accrual. See New Zealand Lamb Co. Inc. v. United States, 40 F.3d
377 (Fed. Cir. 1994); Syva Co. v. United States, 681 F. Supp. 885 (CIT
1988); and Travenol Laboratories Inc. v. United States, 118 F.3d 749
(Fed. Cir. 1997). In addition, a reference to receiving a refund has
been added in paragraph (a)(2) of Sec. 174.12. These two changes
clarify that both the assessment and the refund (or non-refund) of
interest are protestable decisions.
Comments
Before adopting these interim regulations as a final rule,
consideration will be given to any written comments timely submitted to
Customs, including comments on the clarity of this interim rule and how
it may be made easier to understand. Comments submitted will be
available for public inspection in accordance with the Freedom of
Information Act (5 U.S.C. 552), Sec. 1.4, Treasury Department
Regulations (31 CFR 1.4), and Sec. 103.11(b), Customs Regulations (19
CFR 103.11(b)), on normal business days between the hours of 9 a.m. and
4:30 p.m. at the Regulations Branch, Office of Regulations and Rulings,
U.S. Customs Service, 1300 Pennsylvania Avenue, N.W., 3rd Floor,
Washington, D.C.
Inapplicability of Prior Public Notice and Comment Procedures and
Delayed Effective Date Requirements
Pursuant to the provisions of 5 U.S.C. 553(b)(B), Customs has
determined that prior public notice and comment procedures on these
regulations are unnecessary and contrary to the public interest. The
regulatory changes correct the Customs Regulations by conforming them
to the terms of statutory provisions, and to the principles reflected
in judicial decisions, that are currently in effect. In addition, in
some cases, the changes conform the regulatory provisions to
longstanding Customs administrative procedures and practices that
confer benefits on, or otherwise militate in favor of, the general
public. For the same reasons, pursuant to the provisions of 5 U.S.C.
553(d)(1) and (3), Customs finds that there is good cause for
dispensing with a delayed effective date.
Executive Order 12866
This document does not meet the criteria for a ``significant
regulatory action'' as specified in E.O. 12866.
Regulatory Flexibility Act
Because no notice of proposed rulemaking is required for interim
regulations, the provisions of the Regulatory Flexibility Act (5 U.S.C.
601 et seq.) do not apply.
[[Page 56437]]
List of Subjects
19 CFR Part 24
Accounting, Claims, Customs duties and inspection, Interest, Taxes,
User fees, Wages.
19 CFR Part 159
Computer technology, Customs duties and inspection, Entry, Imports,
Liquidation.
19 CFR Part 174
Administrative practice and procedure, Customs duties and
inspection, Protests.
Amendments to the Regulations
For the reasons stated in the preamble, Parts 24, 159 and 174 of
the Customs Regulations (19 CFR Parts 24, 159 and 174) are amended as
set forth below.
PART 24--CUSTOMS FINANCIAL AND ACCOUNTING PROCEDURE
1-2. The general authority citation for Part 24 is revised, and the
specific authority citation for Sec. 24.24 is removed, and the specific
authority citations for Secs. 24.1, 24.11 and 24.36 continue to read as
follows:
Authority: 5 U.S.C. 301; 19 U.S.C. 58a-58c, 66, 1202 (General
Note 20, Harmonized Tariff Schedule of the United States), 1505,
1624; 26 U.S.C. 4461, 4462; 31 U.S.C. 9701.
Section 24.1 also issued under 19 U.S.C. 197, 198, 1648;
* * * * *
Section 24.11 also issued under 19 U.S.C. 1485(d);
* * * * *
Section 24.36 also issued under 26 U.S.C. 6423.
Sec. 24.1 [Amended]
3. In Sec. 24.1:
a. The section heading is amended by adding ``fees, interest,''
after ``taxes,'';
b. The introductory text of paragraph (a) is amended by adding
``fees, interest,'' after ``taxes,'';
c. The first sentence of paragraph (a)(3)(i) is amended by adding
``fees, interest,'' after ``taxes,'';
d. The first sentence of paragraph (a)(7) is amended by adding ``,
fees,'' after ``taxes'';
e. The first sentence of the introductory text of paragraph (b) is
amended by adding ``fees, interest,'' after ``taxes,'';
f. Paragraph (b)(3) is amended by adding ``fees,'' after
``taxes,'';
g. Paragraph (d) is amended by adding ``fees, interest,'' after
``taxes,''; and
h. In paragraph (e), the first sentence is amended by adding ``,
interest,'' after ``fees'' and the second sentence is amended by adding
``, fees, interest,'' after ``taxes''.
4. In Sec. 24.3, the first sentence of paragraph (b) is amended by
adding ``, taxes, fees, and interest, if applicable,'' after ``duties''
and paragraph (e) is revised to read as follows:
Sec. 24.3 Bills and accounts; receipts.
* * * * *
(e) Except for bills resulting from dishonored checks or dishonored
Automated Clearinghouse (ACH) transactions, all other bills for duties,
taxes, fees, interest, or other charges are due and payable within 30
days of the date of issuance of the bill. Bills resulting from
dishonored checks or dishonored ACH transactions are due within 15 days
of the date of issuance of the bill.
5. In Sec. 24.3a:
a. The section heading is revised;
b. Paragraph (a) is amended by removing the words ``Supplemental
duties (additional duties assessed upon liquidation or
reliquidation),'' and adding, in their place, the words ``supplemental
duties, taxes and fees (increased or additional duties, taxes and fees
assessed upon liquidation or reliquidation) together with interest
thereon,''; and
c. Paragraph (b)(2) is revised.
The revisions read as follows:
Sec. 24.3a Customs bills; interest assessment; delinquency; notice to
principal and surety.
* * * * *
(b) * * *
(2) Interest on supplemental duties, taxes, fees, and interest--(i)
Initial interest accrual. Except as otherwise provided in paragraphs
(b)(2)(i)(A) through (b)(2)(i)(C) of this section, interest assessed
due to an underpayment of duties, taxes, fees, or interest shall accrue
from the date the importer of record is required to deposit estimated
duties, taxes, fees, and interest to the date of liquidation or
reliquidation of the applicable entry or reconciliation. An example
follows:
Example: Entry underpaid as determined upon liquidation
[GRAPHIC] [TIFF OMITTED] TR20OC99.000
Importer owes $500 plus interest as follows:
The importer makes a $1,000 initial deposit on the required date
(January 1) and the entry liquidates for $1,500 (December 1). Upon
liquidation, the importer will be billed for $500 plus interest. The
interest will accrue from the date payment was due (January 1) to
date of liquidation (December 1).
(A) If a refund of duties, taxes, fees, or interest was made prior
to liquidation or reliquidation and is determined upon liquidation or
reliquidation to be excessive, in addition to any other interest
accrued under this paragraph (b)(2)(i), interest also shall accrue on
the excess amount refunded from the date of the refund to the date of
liquidation or reliquidation of the applicable entry or reconciliation.
An example follows:
Example: Pre-liquidation refund but entry liquidates for an
increase
[GRAPHIC] [TIFF OMITTED] TR20OC99.001
[[Page 56438]]
Importer owes $800 plus interest as follows:
The importer makes a $1,000 initial deposit on the required date
(January 1) and receives a pre-liquidation refund of $300 (May 1)
and the entry liquidates for $1,500 (December 1). Upon liquidation,
the importer will be billed for $800 plus interest. The interest
accrues in two segments: (1) On the original underpayment ($500)
from the date of deposit (January 1) to the date of liquidation
(December 1); and (2) on the pre-liquidation refund ($300) from the
date of the refund (May 1) to the date of liquidation (December 1).
(B) The following rules shall apply in the case of an additional
deposit of duties, taxes, fees, or interest made prior to liquidation
or reliquidation:
(1) If the additional deposit is determined upon liquidation or
reliquidation of the applicable entry or reconciliation to constitute
the correct remaining balance that was required to be deposited on the
date the deposit was due, interest shall accrue on the amount of the
additional deposit only from the date of the initial deposit until the
date the additional deposit was made. An example follows:
Example: Additional deposit made and entry liquidates for total
amount deposited
[GRAPHIC] [TIFF OMITTED] TR20OC99.002
Importer owes interest on $200 as follows:
The importer makes a $1,000 initial deposit on the required date
(January 1) and an additional pre-liquidation deposit of $200 (May
1) and the entry liquidates for $1,200 (December 1). Upon
liquidation, the importer will be billed for interest on the
original $200 underpayment from the date of the initial deposit
(January 1) to the date of the additional deposit (May 1).
(2) If the additional deposit is determined upon liquidation or
reliquidation of the applicable entry or reconciliation to be less than
the full balance owed on the amount initially required to be deposited,
in addition to any other interest accrued under this paragraph
(b)(2)(i), interest also shall accrue on the remaining unpaid balance
from the date deposit was initially required to the date of liquidation
or reliquidation. An example follows:
Example: Additional deposit made and entry underpaid as
determined upon liquidation
[GRAPHIC] [TIFF OMITTED] TR20OC99.003
Importer owes $300 plus interest as follows:
The importer makes a $1,000 initial deposit on the required date
(January 1) and an additional pre-liquidation deposit of $200 (May
1) and the entry liquidates for $1,500 (December 1). Upon
liquidation, the importer will be billed for $300 plus interest. The
interest accrues in two segments: (1) on the additional deposit
($200), from the date deposit was required (January 1) to the date
of the additional deposit (May 1); and (2) on the remaining
underpayment ($300), from the date deposit was required (January 1),
to the date of liquidation (December 1).
(3) If an entry or reconciliation is determined upon liquidation or
reliquidation to involve both an excess deposit and an excess refund
made prior to liquidation or reliquidation, interest in each case shall
be computed separately and the resulting amounts shall be netted for
purposes of determining the final amount of interest to be reflected in
the underpaid amount. An example follows:
Example: Excess pre-liquidation deposit and excess pre-
liquidation refund
[GRAPHIC] [TIFF OMITTED] TR20OC99.004
Importer owes $200 plus or minus net interest as follows:
The importer makes a $1,000 initial deposit on the required date
(January 1) and receives a pre-liquidation refund of $300 (May 1)
and the entry liquidates for $900 (December 1). Upon liquidation,
the importer will be billed for $200 plus or minus net interest. The
interest accrues in two segments: (1) Interest accrues in favor of
the importer on the initial overpayment ($100) from the date of
deposit (January 1) to the date of the refund (May 1); and (2)
interest accrues in favor of the Government on the refund
overpayment ($200) from the date of the refund (May 1) to the date
of liquidation (December 1).
(4) If the additional deposit or any portion thereof is determined
upon liquidation or reliquidation of the applicable entry or
reconciliation to constitute a payment in excess of the amount
initially required to be deposited, the excess deposit shall be treated
as a refundable amount on which interest also may be payable (see
Sec. 24.36).
(C) If a depository bank notifies Customs by a debit voucher that a
Customs account is being debited due to a dishonored check or
dishonored Automated Clearinghouse (ACH) transaction, interest shall
accrue on the debited amount from the date of the debit voucher to
either the date of payment of the debt represented by the debit voucher
or the date of issuance of a bill for payment, whichever date is
earlier.
[[Page 56439]]
(ii) Interest on overdue bills. If duties, taxes, fees, and
interest are not paid in full within the applicable period specified in
Sec. 24.3(e), any unpaid balance shall be considered delinquent and
shall bear interest until the full balance is paid.
6. Section 24.11 is revised to read as follows:
Sec. 24.11 Notice to importer or owner of increased or additional
duties, taxes, fees and interest.
Any increased or additional duties, taxes, fees or interest found
due upon liquidation or reliquidation shall be billed to the importer
of record, or to the actual owner if the following have been filed with
Customs:
(a) A declaration of the actual owner in accordance with section
485(d), Tariff Act of 1930, as amended (19 U.S.C. 1485(d)), and
Sec. 141.20 of this chapter; and
(b) A bond on Customs Form 301 in accordance with Sec. 141.20 of
this chapter.
Sec. 24.25 [Amended]
7. In Sec. 24.25, the second sentence of paragraph (a) is amended
by removing the words ``and fees'' and adding, in their place, the
words ``, fees, and interest''.
8. In Sec. 24.36:
a. Paragraph (a) is amended by revising the first sentence, adding
a new sentence at the end and adding new paragraphs (a)(1) through
(a)(3);
b. The first sentence of paragraph (b) is amended by removing the
words ``duties or taxes'' and adding, in their place, the words
``duties, taxes, fees or interest''; and
c. Paragraph (c) is amended by removing the words ``duties or
internal revenue taxes'' and adding, in their place, the words
``duties, taxes, fees or interest''.
The revisions and additions read as follows:
Sec. 24.36 Refunds of excessive duties, taxes, etc.
(a) When it is found upon, or prior to, liquidation or
reliquidation of an entry or reconciliation that a refund of excessive
duties, taxes, fees or interest (at the rate determined in accordance
with Sec. 24.3a(c)(1)) is due, a refund shall be prepared in the name
of the person to whom the refund is due, as determined under paragraphs
(b) and (c) of this section. * * * For purposes of this section:
(1) Except as otherwise provided in paragraphs (a)(1)(i) through
(a)(1)(iii) of this section, the refund shall include interest on the
excess moneys deposited with Customs, and such interest shall accrue
from the date the duties, taxes, fees or interest were deposited or, in
a case in which a proper claim is filed under 19 U.S.C. 1520(d) and
subpart D of Part 181 of this chapter, from the date such claim is
filed, to the date of liquidation or reliquidation of the applicable
entry or reconciliation. An example follows:
Example: Entry liquidates for a refund
[GRAPHIC] [TIFF OMITTED] TR20OC99.005
Importer is owed a refund of $600 plus interest as follows:
The importer makes a $1,000 initial deposit (January 1) and the
entry liquidates for $400 (December 1). Upon liquidation, the
importer will be owed a refund of $600 plus interest. The interest
will accrue from the date of deposit (January 1) to the date of
liquidation (December 1).
(i) If an additional deposit of duties, taxes, fees or interest was
made prior to liquidation or reliquidation and if any portion of that
additional deposit was in excess of the amount required to be
deposited, in addition to any other interest accrued under this
paragraph (a)(1), the refund also shall include interest accrued on the
excess additional deposit from the date of the additional deposit to
the date of liquidation or reliquidation of the applicable entry or
reconciliation. An example follows:
Example: Additional deposit made and entry liquidates for a
refund
[GRAPHIC] [TIFF OMITTED] TR20OC99.006
Importer is owed a refund of $900 plus interest as follows:
The importer makes a $1,000 initial deposit (January 1) and an
additional pre-liquidation deposit of $200 (May 1) and the entry
liquidates for $300 (December 1). Upon liquidation, the importer
will be refunded $900 plus interest. The interest accrues in two
segments: (1) On the additional deposit overpayment ($200), from the
date of the additional deposit (May 1) to the date of liquidation
(December 1); and (2) on the initial deposit overpayment ($700),
from the date of deposit (January 1) to the date of liquidation
(December 1).
(ii) In the case of a refund of duties, taxes, fees or interest
made prior to liquidation, such a refund will include only principal
amounts and not any interest thereon. Interest on such principal
amounts will be computed at the time of liquidation or reliquidation
and shall accrue as follows:
(A) Interest shall only accrue on the amount refunded from the date
the duties, taxes, fees or interest were deposited to the date of the
refund if the amount refunded is determined upon liquidation or
reliquidation of the applicable entry or reconciliation to constitute
the true excess amount deposited with Customs. An example follows:
Example: Pre-liquidation refund and entry liquidates for net
amount collected
[[Page 56440]]
[GRAPHIC] [TIFF OMITTED] TR20OC99.007
Importer is owed a refund of interest on $200 as follows:
The importer makes a $1,000 initial deposit (January 1) and receives
a pre-liquidation refund of $200 (May 1) and the entry liquidates
for $800 (December 1). Upon liquidation, the importer will be
refunded interest on the $200 overpayment from the date of the
initial deposit (January 1) to the date of the pre-liquidation
refund (May 1).
(B) If the amount refunded is determined upon liquidation or
reliquidation of the applicable entry or reconciliation to constitute
less than the true excess amount deposited with Customs, in addition to
any other interest accrued under this paragraph (a)(1), interest also
shall accrue on the remaining excess deposit from the date the duties,
taxes, fees or interest were deposited to the date of liquidation or
reliquidation. An example follows:
Example: Pre-liquidation refund and entry liquidates for an
additional refund
[GRAPHIC] [TIFF OMITTED] TR20OC99.008
Importer is owed a refund of $700 plus interest as follows:
The importer makes a $1,000 initial deposit (January 1) and receives
a pre-liquidation refund of $200 (May 1) and the entry liquidates
for $100 (December 1). Upon liquidation, the importer will be
refunded $700 plus interest. The interest accrues in two segments:
(1) On the pre-liquidation refund ($200), from the date of deposit
(January 1) to the date of the pre-liquidation refund (May 1); and
(2) on the remaining overpayment ($700), from the date of deposit
(January 1) to the date of liquidation (December 1).
(C) If an entry or reconciliation is determined upon liquidation or
reliquidation to involve both an initial underpayment and an additional
excess deposit, interest in each case shall be computed separately and
the resulting amounts shall be netted for purposes of determining the
final amount of interest to be reflected in the refund. An example
follows:
Example: Additional deposit made and entry liquidates for a
refund
[GRAPHIC] [TIFF OMITTED] TR20OC99.009
Importer is owed a refund of $200 plus or minus net interest as
follows:
The importer makes a $1,000 initial deposit on the required date
(January 1) and an additional pre-liquidation deposit of $300 (May
1) and the entry liquidates for $1,100 (December 1). Upon
liquidation, the importer will be refunded $200 plus or minus net
interest. The interest accrues in two segments: (1) Interest accrues
in favor of the Government on the initial underpayment ($100) from
the date deposit was required (January 1) to the date of the
additional deposit (May 1); and (2) interest accrues in favor of the
importer on the overpayment ($200) from the date of the additional
deposit (May 1) to the date of liquidation (December 1).
(D) If the amount refunded or any portion thereof exceeds the
amount properly refundable as determined upon liquidation or
reliquidation of the applicable entry or reliquidation, the excess
amount refunded shall be treated as an underpayment of duties, taxes,
fees or interest on which interest shall accrue as provided in
Sec. 24.3a.
(2) A refund determined to be due upon liquidation or
reliquidation, including a refund consisting only of interest that has
accrued in accordance with paragraph (a)(1)(ii) of this section, shall
be paid within 30 days of the date of liquidation or reliquidation of
the applicable entry or reconciliation.
(3) If a refund, including any interest thereon, is not paid in
full within the applicable 30-day period specified in paragraph (a)(2)
of this section, the refund shall be considered delinquent thereafter
and interest shall accrue on the unpaid balance by 30-day periods until
the full balance is paid. However, no interest will accrue during the
30-day period in which the refund is paid.
* * * * *
PART 159--LIQUIDATION OF DUTIES
1. The authority citation for Part 159 is revised to read as
follows:
Authority: 19 U.S.C. 66, 1500, 1504, 1624. Subpart C also issued
under 31 U.S.C. 5151.
Sections 159.4, 159.5, and 159.21 also issued under 19 U.S.C. 1315;
Section 159.6 also issued under 19 U.S.C. 1321, 1505;
Section 159.7 also issued under 19 U.S.C. 1557;
Section 159.22 also issued under 19 U.S.C. 1507;
Section 159.44 also issued under 15 U.S.C. 73, 74;
Section 159.46 also issued under 19 U.S.C. 1304;
Section 159.55 also issued under 19 U.S.C. 1558;
Section 159.57 also issued under 19 U.S.C. 1516;
Secs. 159.4, 159.6, 159.7, 159.21, 159.22, 159.44, 159.46, 159.55,
159.57 [Amended]
2. The parenthetical authority citations at the end of Secs. 159.4,
159.5, 159.6, 159.7, 159.21, 159.22, 159.44, 159.46, 159.55, and 159.57
are removed.
3. In Sec. 159.6:
a. The first sentence of paragraph (a) is amended by removing the
words ``and taxes'' the first time they appear and
[[Page 56441]]
adding, in their place, the words ``taxes, and interest'';
b. The introductory text of paragraph (b) is amended by removing
the words ``and taxes'' wherever they appear and adding, in their
place, the words ``taxes, and interest'';
c. Paragraph (c) is amended by removing the words ``and taxes
assessed in the liquidation'' and adding, in their place, the words
``taxes, and interest assessed in the liquidation'' and by removing the
words ``and taxes assessed in the reliquidation'' and adding, in their
place, the words ``taxes, and interest assessed in the reliquidation'';
and
d. In paragraph (d), the paragraph heading and the paragraph text
are amended by adding ``and interest'' after ``taxes''.
PART 174--PROTESTS
1. The authority citation for Part 174 continues to read as
follows:
Authority: 19 U.S.C. 66, 1514, 1515, 1624.
Sec. 174.11 [Amended]
2. In Sec. 174.11, paragraph (c) is amended by adding ``, including
the accrual of interest,'' after ``character''.
Sec. 174.12 [Amended]
3. In Sec. 174.12, paragraph (a)(2) is amended by adding '', or
receiving a refund of,'' after ``paying'.
Approved: July 28, 1999.
Raymond W. Kelly,
Commissioner of Customs.
Dennis M. O'Connell,
Acting Deputy Assistant Secretary of the Treasury.
[FR Doc. 99-26882 Filed 10-19-99; 8:45 am]
BILLING CODE 4820-02-P
