Possible Fights Over Who Gets a Share of IEEPA Duty Refunds Loom: Attorney

"At the end of the day, there's a question about who's entitled to these refunds. The government typically, and I think in this case, will be happy to just issue them to the importer of record. However, to the extent that importers of record have negotiated with others to share in those duties, you may very well have contractual issues that you might settle, or you might wind up in litigation with people that feel that they are entitled to the refunds that you're getting," attorney Lee Sandler said.

"So I wouldn't be surprised if some companies will fall into that arena and have those types of disputes, but I wouldn't anticipate it's going to happen in the government's refund process. I think it will come after the fact, with respect to private parties, of trying to get some of the refunds into their pockets," he continued.

But before getting to that point, there are also a number of questions still up in the air when it comes to whether companies can receive refunds for the duties they paid, should the Supreme Court strike down the IEEPA tariffs.

For starters, Supreme Court justices Neil Gorsuch and Amy Coney Barrett may be unlikely to allow relief to be applied prospectively and not retroactively, so if the IEEPA tariffs are struck down, "I really do think it's going to be an issue where refunds will be issued for whichever duties are affected by the decision," Sandler said, noting that he is speculating on possible outcomes.

To prepare for an outcome where refunds could happen, companies should make sure their import records are intact.

"You need to make sure that you've got the commercial backup for it, because more than likely, it's going to be a system where whoever is claiming the refund is going to have to prove that they're entitled to the refund," Sandler said. If a company has unliquidated entries, they should file post-summary corrections, while liquidated entries might require filing a protest. Companies also will have to figure out if they want to receive the money quickly or if they want to wait to get accumulated interest on the refund, he said.

Companies may also decide to go to court over their duties, which is an option to "keep in your hip pocket in the event that something surprising happens in the interim," Sandler said.

If companies decide to file protests, which is what Sandler advises as a means to protect companies' interests, they should work with their customs brokers or attorneys, because these protests are legal documents, Sandler continued.

"I started out my career as a Department of Justice trial attorney. The first thing that we did was take a look at the documents to see if there's any way we could win the case without ever getting to the merits," Sandler said. "And that continues to be the mantra at Customs and at the Department of Justice. And so you don't want to file a legal document that is missing some legal element that is necessary for it to be validly accepted and ruled upon."

Companies also should double-check their protests or claims by identifying whether there are any other issues to include in their protests, beyond the IEEPA tariffs.

"The other issue with filing protests that you have to take into account is it's not one-size-fits-all. The entries you're protesting may have issues that have nothing to do with IEEPA that you want to protest, and you don't want to mess up those. So some you'll want to extend, and others, you may want to move it more rapidly," Sandler said in response to a question about filing an extension of liquidation for entries not already liquidated in order to preserve the right to file a post-summary correction instead of a protest.

Flexport's Anna Zajac, senior manager for trade advisory, said in response to that particular question that, in her work with clients, CBP informed her that it wouldn't extend liquidation on any entries that have IEEPA tariffs deposited.

Should the IEEPA tariffs be struck down, the trade community has been speculating on what other measures the U.S. government might use to replace the IEEPA tariffs.

One would be to use Section 338 and say that the tariffs are justified under different statutes, according to Sandler. The government could also use Section 338 as the basis for not issuing refunds because the monies were properly collected under Section 338, although "I think it's a real stretch of the law," Sandler said. Section 338 allows the U.S. president to impose tariffs of up to 50% on countries that engage in perceived discriminatory actions against U.S. commerce.

Another likely outcome is potentially more Section 232 tariff actions on specific classes and merchandise, Zajac said.

Sandler agreed: The White House "truly want[s] to be able to negotiate with foreign countries."