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Despite the Supreme Court’s ruling that IEEPA tariffs were unlawful more than a month ago, companies that paid these duties are still waiting for their refunds plus interest, as the administrative process is implemented. Customs and Border Protection is working on an electronic system to process the refunds, but rollout and Treasury Department approvals will take time and there is still potential for additional litigation, leaving importers in limbo for an unknown time.
See previous alerts on the Supreme Court’s decision and its aftermath for more details [Lewis Brisbois | Supreme Court Rejects U.S. Global Tariffs; Lewis Brisbois | The Trump Administration Tariffs Are Not Gone After…; Lewis Brisbois | What Do We Know At This Point About the IEEPA Tariff…]
Some investors see this as an opportunity to purchase tariff refund claims at a discount, taking on litigation of the claims [Wall Street is betting on tariff refunds after Supreme Court ruling : NPR] in hopes of eventually receiving the full refund amount. With $166 billion estimated for the tariff refund total, not counting interest, the market is sensing real opportunity. For importers, the lure of a faster route to cash on hand, even if less than the full amount, is incentive enough to make a deal.
There are, however, risks associated with selling a tariff refund claim. Questions as to whether the purchaser of the claim would have standing to take over the claim and receive the refund if and when it is issued, accounting complications [Companies Are Selling Their Tariff Refund Rights. Accountants Say Not So Fast], and potentially predatory arrangements with clawback provisions are among many issues that must be addressed. Before accepting any such offers, businesses should carefully review any agreements prior to execution, and consider consulting with legal counsel to ensure that the company is protected.
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