Electronic Refunds

<RULE> DEPARTMENT OF HOMELAND SECURITY <SUBAGY>U.S. Customs and Border Protection</SUBAGY> <CFR>19 CFR Parts 24, 141, 159, and 174</CFR> <DEPDOC>[USCBP-2025-1076; CBP Dec. 25-18]</DEPDOC> <RIN>RIN 1685-AA36</RIN> <SUBJECT>Electronic Refunds</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 document amends the U.S. Customs and Border Protection (CBP) regulations to reflect that, subject to limited exceptions, CBP will issue all refunds electronically. This document explains the process required to receive electronic refunds and the process to receive paper checks in those rare instances where the recipient meets the criteria for a waiver. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> The interim final rule is effective February 6, 2026. Comments regarding this interim final rule must be received by March 3, 2026. </EFFDATE> <HD SOURCE="HED">ADDRESSES:</HD> Please submit comments, identified by <E T="03">docket number</E> USCBP-2025-1076, by the following method: Federal eRulemaking Portal at <E T="03">http://www.regulations.gov.</E> Follow the instructions for submitting comments. <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">http://www.regulations.gov,</E> including any personal information provided. For detailed instructions on submitting comments and 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">http://www.regulations.gov.</E> <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> Nate DeRosa, Revenue Division, Office of Finance, at (317) 298-1042 or <E T="03">frn-achrefundsupport@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 this interim final rule (IFR). U.S. Customs and Border Protection (CBP) also invites comments that relate to the economic, environmental, or federalism effects that might result from this IFR. Comments that will provide the most assistance to CBP will reference a specific portion of the IFR, explain the reason for any recommended change, and include data, information, or authority that supports such recommended change. <HD SOURCE="HD1">II. Background</HD> Section 1505(b) of title 19 of the United States Code (19 U.S.C. 1505(b)) generally requires CBP to refund any excess deposits of duties, fees, and interest within 30 days of liquidation or reliquidation. CBP has additional general authority to refund duties or other receipts, found in 19 U.S.C. 1520 ( <E T="03">e.g.,</E> in situations where fees, charges, or exactions were erroneously collected or where excess duties, fees, charges, or exactions were deposited or paid). <SU>1</SU> <FTREF/> <FTNT> <SU>1</SU>  Certain statutes also provide CBP with specific authority for refunds associated with repairs of vessels ( <E T="03">see</E> 19 U.S.C. 1466), drawback ( <E T="03">see</E> 19 U.S.C. 1313), protests ( <E T="03">see</E> 19 U.S.C. 1514 and 1515), loss, deterioration, or damage to warehouse goods ( <E T="03">see</E> 19 U.S.C. 1563), countervailing duty investigations ( <E T="03">see</E> 19 U.S.C. 1671c-1671f, 1677g), and antidumping investigations ( <E T="03">see</E> 19 U.S.C. 1673c-1673f, 1677g). </FTNT> Section 3332(f)(1) of title 31 of the United States Code (31 U.S.C. 3332(f)(1)) generally mandates that all Federal payments made by the government, other than payments made under the Internal Revenue Code of 1986, be made by electronic funds transfer. Electronic funds transfer means any transfer of funds, other than a transaction originated by cash, check, or similar paper instrument, that is initiated through an electronic terminal, telephone, computer, or magnetic tape for the purpose of, among other things, authorizing a financial institution to debit or credit an account. An Automated Clearing House (ACH) transfer is an electronic funds transfer. 31 U.S.C. 3332(j)(1). The definition of “Federal payments” in 31 U.S.C. 3332(j)(3) is inclusive of refunds such as those issued by CBP. <SU>2</SU> <FTREF/> The requirement for electronic funds transfers may be waived in cases where compliance imposes a hardship or in other circumstances as may be necessary. 31 U.S.C. 3332(f)(2)(A). The regulations implementing 31 U.S.C. 3332 are contained in 31 CFR part 208, and specifically, the regulations related to the electronic funds transfer waiver process are set forth in 31 CFR 208.4. <FTNT> <SU>2</SU>  Further, implementing regulations in section 208.2 of title 31 of the Code of Federal Regulations (31 CFR 208.2) expressly include within the definition of “Federal payment” “miscellaneous payments including . . . overpayment reimbursements[.]” </FTNT> On March 25, 2025, President Trump issued Executive Order 14247, <E T="03">Modernizing Payments To and From America's Bank Account,</E> 90 FR 14001 (March 25, 2025), mandating the transition from paper checks to electronic payments for all Federal disbursements and receipts by digitizing payments to the extent permissible under applicable law. The goals of the Executive Order are to defend against financial fraud and improper payments, enhance the efficiency and security of Federal payments, and reduce costs associated with paper-based payments by the Federal government. <SU>3</SU> <FTREF/> Section 4 of the Executive Order articulates exceptions and accommodations when electronic payment methods are not feasible. <FTNT> <SU>3</SU>  A Fact Sheet accompanying the Executive Order, issued the same day, explains the disadvantages of paper-based payments, stating that mail theft complaints have increased substantially since 2020, and check fraud has become more common, with banks issuing about 680,000 reports of check fraud in 2022 (nearly double the number from 2021). The Fact Sheet further notes that U.S. Treasury checks are 16 times more likely to be reported lost or stolen, returned undeliverable, or altered than an electronic funds transfer, and that the maintenance of the physical infrastructure and specialized technology for digitizing paper records cost over $657 million in fiscal year 2024. <E T="03">See</E> Fact Sheet: President Donald J. Trump Modernizes Payments to and from America's Bank Account available at <E T="03">https://www.whitehouse.gov/fact-sheets/2025/03/fact-sheet-president-donald-j-trump-modernizes-payments-to-and-from-americas-bank-account/.</E> </FTNT> Historically, the majority of CBP refunds for the overpayment of customs duties, taxes, and fees were transmitted as paper checks issued by the U.S. Department of the Treasury (U.S. Treasury) and mailed to the address of the importer. An importer may designate a third party, such as a licensed customs broker, via CBP Form 4811 (Special Address Notification), to receive refunds on the importer's behalf. To designate a third party as the recipient of a refund, CBP provides two options. The importer may fill out and submit CBP Form 4811 via an email message to the importer's assigned Center of Excellence and Expertise (Center). If an importer has not yet been assigned to a Center, CBP Form 4811 may be submitted to the Center that most closely aligns with the tariff number of the importer's highest valued commodity. <SU>4</SU> <FTREF/> The importer may also utilize the Notify Parties tab in the Automated Commercial Environment (ACE) Secure Data Portal (ACE Portal) by providing the required information for the designated third party. <SU>5</SU> <FTREF/> CBP deems use of the Notify Parties tab in the ACE Portal to designate a third party to be the electronic equivalent of CBP Form 4811 and a CBP-approved method to submit CBP Form 4811. <FTNT> <SU>4</SU>   <E T="03">See</E> 19 CFR 101.10. <E T="03">See also</E> CBP, Centers of Excellence and Expertise Directory, available at <E T="03">https://www.cbp.gov/trade/centers-excellence-and-expertise-information/cee-directory</E> (last updated Nov. 21, 2025). </FTNT> <FTNT> <SU>5</SU>  On January 2, 2026, CBP deployed a new functionality in the ACE Portal that enables trade account owners to use the new “Add Notify Party” button under the “Notify Parties” tab to designate a third party. </FTNT> While it has been available for some time, the issuance of electronic refunds via ACH is voluntary and has been relatively limited in scope due to technological limitations. <SU>6</SU> <FTREF/> The number of refunds CBP issues electronically has gradually increased in recent years, and in 2024 and 2025 approximately 30% of refunds CBP issued annually were issued electronically. CBP has been modernizing payment processes by reducing manual processes generally, and this rule specifically focuses on the management of electronic refunds through ACE. This rule aligns with the requirements of 31 U.S.C. 3332, the goals articulated in Executive Order 14247, and CBP's ongoing modernization efforts. <FTNT> <SU>6</SU>  To participate in the ACH Refund program, an importer must submit an ACH Refunds Enrollment Form via an email message to CBP's Revenue Division. Once CBP has received and processed the enrollment form, all refunds are issued electronically to the designated bank account. </FTNT> <HD SOURCE="HD1">III. Issuance of Electronic Refunds</HD> ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 101k characters. Full document text is stored and available for version comparison. ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━