8/29/26 — Allegations Abound: Customs is Offsetting IEEPA Refunds Against Disputed Debts and Rate Advances

Multiple customs attorneys report that CBP is offsetting International Emergency Economic Powers Act refunds against debts that are disputed or not yet fixed, and separately using the IEEPA refund process to retroactively apply full Section 232 duty rates to entries with dutiable metal content.

This issue had also surfaced in a recent Court of International Trade litigation case, where an importer asked Judge Richard Eaton in July to modify his earlier order authorizing CBP to reliquidate finally liquidated entries so that it would also bar CBP from offsetting IEEPA refunds. CBP told the court it was not offsetting refunds with disputed or non-fixed debts; the importer disputed that, citing multiple instances where offsets were applied to debts still in dispute.

Examples include an IEEPA refund offset against a New York State tax bill, and another offset against CBP bills that remained under protest and unpaid. Under 19 C.F.R. 24.72, offsets are limited to amounts that are “legally fixed and undisputed” — a limitation CBP itself acknowledged in its brief opposing the importer’s motion, adding that disputed debts cannot form the basis for an offset until a final judgment is entered and the appeal period has run. In one case, a refund was reduced for a state debt that had already been resolved before the federal offset was applied. 31 U.S.C. 3701(d) excludes claims or debts under U.S. tariff laws from the administrative offset statute, 31 U.S.C. 3716(a).

Separately, CBP is applying full Section 232 duty rates — 50 percent on steel, aluminum and copper content under President Trump’s April proclamation — to the entire value of some entries rather than only the metal content, then netting the resulting duty increase against the IEEPA refund on the same entry. Importers affected this way must file a protest to recover the difference. The practice is inconsistent with CBP’s regulations, which are meant to reach only finalized liabilities, not rate advances an importer hasn’t yet had a chance to dispute.

A narrower view distinguishes offsets against unrelated third-party debts from adjustments within the same entry, such as reconciling IEEPA duty against Section 232 duty on the same line, noting that CBP retains broad authority to review value, classification and origin during its 90-day voluntary reliquidation window.

The offsets may also generate fee disputes between importers and counsel working on contingency, since a diverted refund could leave a client arguing a fee should be based on the amount actually owed rather than the amount received.

CBP did not respond to a request for comment. The dispute could prompt a new wave of CAPE-related litigation at the Court of International Trade absent a court order addressing the offset practice directly.