Tonnage Tax Modernization

<RULE> DEPARTMENT OF HOMELAND SECURITY <SUBAGY>U.S. Customs and Border Protection</SUBAGY> <CFR>19 CFR Part 4</CFR> <DEPDOC>[Docket No. USCBP-2025-0581; CBP Dec. 25-13]</DEPDOC> <RIN>RIN 1685-AA34</RIN> <SUBJECT>Tonnage Tax Modernization</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> U.S. Customs and Border Protection, Department of Homeland Security. <HD SOURCE="HED">ACTION:</HD> Interim final rule; request for comments. <SUM> <HD SOURCE="HED">SUMMARY:</HD> This interim final rule amends U.S. Customs and Border Protection (CBP) regulations so that a tonnage year, for purposes of calculating tonnage taxes for a vessel, is aligned with the fiscal year of the Federal Government. Currently, CBP calculates a unique tonnage year for each vessel, starting when the vessel first enters the United States. This rule also permits CBP to issue a single electronic receipt for the payment of tonnage taxes and light money. This rule simplifies the tonnage tax process, decreases the number of errors in assessing tonnage taxes, and simplifies the tracking of tonnage tax payments. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> <E T="03">Effective Date:</E> This interim final rule is effective on September 16, 2025. <E T="03">Comment Date:</E> Comments must be received by November 17, 2025. </EFFDATE> <HD SOURCE="HED">ADDRESSES:</HD> Please submit comments, identified by docket number, by the following method: • <E T="03">Federal eRulemaking Portal: https://www.regulations.gov.</E> Follow the instructions for submitting comments via docket number USCBP-2025-0581. <E T="03">Instructions:</E> All submissions received must include the agency name and docket number for this rulemaking. All comments received will be posted without change to <E T="03">https://www.regulations.gov,</E> including any personal information provided. For additional information on the rulemaking process, see the “Public Participation” heading of the <E T="02">SUPPLEMENTARY INFORMATION</E> section of this document. <E T="03">Docket:</E> For access to the docket to read background documents or comments received, go to <E T="03">https://www.regulations.gov.</E> <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> Brian Sale, Branch Chief, Office of Field Operations, U.S. Customs and Border Protection, by telephone at 202-325-3338 or by email at <E T="03">OFO-MANIFESTBRANCH@cbp.dhs.gov.</E> </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> <HD SOURCE="HD1">I. Public Participation</HD> Interested persons are invited to participate in this rulemaking by submitting written data, views, or arguments on all aspects of the interim final rule. CBP also invites comments that relate to the economic, environmental, or federalism effects that might result from this rule. Comments that will provide the most assistance to CBP will reference a specific portion of the interim final rule, explain the reason for any recommended change, and include data, information, or authority that support such recommended change. <HD SOURCE="HD1">II. Background and Need for Rule</HD> U.S. Customs and Border Protection (CBP) assesses and collects tonnage taxes on vessels brought into the United States from a foreign port or place under the authority of 46 U.S.C. 60301. <SU>1</SU> <FTREF/> Section 4.20 of title 19 of the Code of Federal Regulations (19 CFR 4.20) details how CBP calculates regular tonnage taxes. In general, CBP calculates regular tonnage taxes based on either a lower rate of 2 cents per net ton for certain specified vessels, not to exceed 10 cents per net ton in any one year, or a higher rate of 6 cents per net ton, not to exceed 30 cents per net ton per year, for all other vessels. <FTREF/> <SU>2</SU> <E T="03">See</E> 46 U.S.C. 60301(a), (b); 19 CFR 4.20(a). Additional regulatory provisions describe the exceptions to regular tonnage tax, the process for obtaining a certificate of payment and cash receipt, the process for applying for a refund, and guidance on how regular tonnage tax is calculated. <E T="03">See</E> 19 CFR 4.20-4.21, 4.23-4.24. Tonnage tax is generally collected along with special tonnage taxes and light money, if applicable. <E T="03">See</E> 19 CFR 4.20(c), 4.22. <SU>3</SU> <FTREF/> <FTNT> <SU>1</SU>   <E T="03">See also</E> Treasury Order 100-20 in which the Secretary of the Treasury delegated to the Secretary of Homeland Security the authority related to the customs revenue functions vested in the Secretary of the Treasury as set forth in 6 U.S.C. 212 and 215, subject to certain exceptions; and DHS, Delegation No. 07010.3, Delegation of Authority to the Commissioner of U.S. Customs and Border Protection II.A (Rev. No. 03.2, Incorporating Change 2) (Dec. 11, 2024). </FTNT> <FTNT> <SU>2</SU>  The lower rate of 2 cents per net ton applies to each entry in a port of the United States of a vessel entering from a foreign port or place in North America, Central America, the West Indies, the Bahama Islands, the Bermuda Islands, or the coast of South America bordering on the Caribbean Sea, a vessel entering from the high seas adjacent to the United States or the above listed foreign locations, and on all vessels (except for vessels of the United States, recreational vessels and barges as defined in 46 U.S.C. 2101) that depart from a U.S. port or place and return to the same port or place without being entered in the United States from another port or place. <E T="03">See</E> 46 U.S.C. 60301(a); 19 CFR 4.20(a). At each entry in a port of the United States of a vessel from a foreign port or place not otherwise specified as receiving the lower rate, the higher rate of 6 cents per net ton, not to exceed a total of 30 cents per net ton per year, applies. <E T="03">See</E> 46 U.S.C. 60301(b); 19 CFR 4.20(a). </FTNT> <FTNT> <SU>3</SU>  Light money is a duty of a specified amount per ton applicable to all foreign vessels entering U.S. ports, unless exempted. <E T="03">See</E> 46 U.S.C. 60302-60304. </FTNT> <HD SOURCE="HD2">A. Tonnage Year</HD> The relevant statute and CBP regulations establish a yearly maximum for the payment of regular tonnage taxes. 46 U.S.C. 60301(a), (b); 19 CFR 4.20(a). For example, if a vessel has made five payments at the 2-cent rate during a tonnage year, CBP will not assess additional regular tonnage tax at the 2-cent rate on that vessel for the remainder of that tonnage year. <E T="03">See</E> 19 CFR 4.20(b). Similarly, if a vessel has made five payments at the 6-cent rate during a tonnage year, CBP will not assess additional tonnage tax at the 6-cent rate on that vessel for the remainder of that tonnage year. <E T="03">See</E> 19 CFR 4.20(b). When determining whether a vessel has met the yearly maximum, CBP calculates a “tonnage year” that is unique to each vessel. The tonnage year starts on the date of the first entry of the vessel concerned and expires on the day preceding the corresponding date of the following year. <E T="03">See</E> 19 CFR 4.20(b). The use of a unique tonnage year for each vessel results in an overly complicated calculation of regular tonnage taxes. For each vessel, the CBP officer must determine the relevant tonnage year to determine whether the yearly maximums have been met. This process increases the opportunities for errors in the tonnage tax calculation, resulting in both overpayments and underpayments. Overpayments result in additional work for CBP to process any requests for a refund and underpayments result in a loss of revenue for the U.S. Government. Additionally, if CBP identifies an error in a vessel's tonnage tax calculation, the process to correct the vessel history can be arduous and time consuming. A consistent tonnage year for all vessels will simplify the tonnage tax collection process and will provide greater certainty on the amount of money due for both CBP and the vessel agents and operators. CBP officers will be able to calculate tonnage taxes more quickly because they will not need to determine each vessel's unique tonnage year. Additionally, vessel agents and operators will be better able to predict their yearly tonnage tax payments and will need to spend less time checking their payment history for errors because there will be less uncertainty on when a tonnage year starts or ends. <HD SOURCE="HD2">B. Receipt Process for Regular Tonnage Tax, Special Tonnage Tax, and Light Money</HD> Upon each payment of regular tonnage tax, special tonnage tax or light money, CBP provides to the master of the vessel a certificate on CBP Form 1002 (Certificate of Payment of Tonnage Tax) that includes the control number from the related cash receipt (CBP Form 368 or 368A). <FTREF/> <SU>4</SU> <E T="03">See</E> 19 CFR 4.23. CBP Form 1002 constitutes the official evidence of the payment of regular tonnage taxes, special tonnage taxes, and light money. <E T="03">See</E> 19 CFR 4.23. This certificate must be presented upon each entry during the tonnage year to establish the date of commencement of the tonnage year and to ensure against overpayment. <E T="03">See</E> 19 CFR 4.23. <FTNT> <SU>4</SU>  Although these forms are referenced as “Customs Form[s]” in 19 CFR 4.20 and 4.23, these forms are now CBP Forms. </FTNT> This manual, paper-based receipt process outlined in the regulations is cumbersome for CBP officers and vessel agents and operators. <SU>5</SU> <FTREF/> The process requires duplicative receipts for the payment of tonnage taxes because CBP prepares and issues, and the vessel agents and operators must keep in the records, a receipt for the payment of tonnage taxes on CBP Form 368 or 368A, as well as a receipt on CBP Form 1002. <FTNT> <SU>5</SU>  For participants in the Mobile Collections and Receipts Pilot (MCR), CBP may issue a single electronic receipt that is th ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 80k characters. 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