What a Client can expect when embarking upon Duty Drawback

Jill La Madeleine, Samantha Vallee and Tracy Hudak discuss duty drawback and specifically, what a claimant can expect when they partner with ITM.

We hope you will gain some valuable insight into the world of customs tariffs. With all the supply chain challenges the world is facing, our aim is to maximize your duty drawback dollars and boost your bottom line. We hope you'll subscribe to our podcast to stay current with each new episode in which will unveil numerous ways to improve your international trade profitability. Thanks for listening.

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Welcome to the Duty Drawback podcast from International Tariff Management here at ITM. We help our clients secure refunds and reductions of duty burdens on imported and exported goods. With more than 40 years of classification, free trade and compliance experience, in each episode, we explore real life examples of how companies are taking full advantage of numerous programs in place for both importers and exporters, and how these little known programs can yield substantial returns to their bottom lines. If you're engaged in international trade, you can expect to learn actionable tips and strategies that you can implement in your business to become a more profitable importer and or exporter. Thanks for tuning in. Now let's dove into this month's episode. Hello, everybody. My name is Jill Le Madeleine. And today joining me are Samantha Valley and Tracy Hudak. Today, we're going to focus on our duty, drawback services and more specifically, what a claimant can expect when they partner with ITM. First, I'd like to introduce my two coworkers. Samantha is a terrace manager at ITM. Samantha works with clients in managing many different types of programs. She comes to us with a professional background in business and experience in customer service. Samantha maintains a keen attention to detail and has established a very good rapport with her clients and also many of the specialists at Customs. Samantha, thanks for being here today. Thank you for having me. Tracy Hudak has been with ITM for 12 years. Tracy has extensive experience as a tariff manager and has been in her role as our operations manager for the last four years. Tracy has a detailed knowledge of the new drawback law and a connection to drawback specialists and customs all around the country. At ITM, Tracy meticulously handles the oversight of the preparation and submission of all duty drawback claims. Thanks, Tracy. Hi. Good to be here. Thanks. So today we'd like to walk people through what a company can expect when they partner with ITM to manage their duty drawback program. We know that pursuing a program can be overwhelming and we want to show them how we help navigate the entire process for them. So I think we'll start with Samantha since she's the tariff manager and she works directly with the client. So Samantha, when a new claimant has just partnered with the ITM, what is the first step? The first step is that we hold what we call a kick off meeting. Each new client is assigned a specific tariff manager here at ITM and the tariff manager acts as the point person for the claimant and also as a liaison between customs, the client and item. Right. And that's something that sets us apart from from different brokers. We actually have a specific tariff manager for each client. So they have a point person here. And it's important that a person is accessible to the client when and if they they need to speak with them. And getting back to the kick off meeting. What do we typically like for our clients to include in a kick off meeting? Who are the people within their company that we like to be in attendance? What we like to have in attendance for our kickoff meetings is somebody from accounts receivable, and this would be someone who has access to the import data for that company. We normally recommend somebody from the shipping department as well, and this person would have access to the export data. And then if this is a manufacturing company, someone with the knowledge of the manufacturing process within that company. Right. That pretty much covers everything that we need to talk about at a kickoff meeting. And we'll talk about a little more as we get further down into what the import and export data is that we look to assemble. So talking more about the kickoff meeting, what do we cover in the kickoff meeting? What specifically do we discuss with these representatives from the company? So before our kickoff meeting, we provide them with the documents required. And so once we have the kickoff meeting with them, we go over that and kind of explain to them exactly what is needed and let them know who's going to coordinate with the tariff manager and discuss the data needed. Right. It's a good opportunity to talk about the whole overview of the program with the client, and I think it's interesting that how we hold the kickoff meeting in the past, we used to always do them in person and we would travel around the country meeting with our prospective clients. I think the world changed a little bit in 2020 with COVID. So why don't you talk a little bit, Samantha, about how we do kickoff meetings now? So almost all of the meetings that we hold now can be done via teams or zoom. We're absolutely willing to do in-person if the client is interested in person kickoff meeting. But most people choose teams or Zoom. And there were years where we would be traveling across the country and now it's we do it from our desks and we still get to see their faces and we know who we're dealing with. So it's I guess it's one of the positives to come out of COVID. So once we've had the kickoff meeting, Samantha, we'll stick with you. Have you on the spot here. We'll get to Tracey after. What are the next steps that the tariff manager goes through? Right. So the next steps the tariff manager goes through is getting the rulings and privileges written up and in order to do that, we need to obtain some general information from the company. This typically looks like their address locations where their imports are coming from, where their exports are going out of, where their exports are going, and also the products to be claimed on. Right. And because we take all that information and because drawback is a privilege and not a right item, then takes the information from the client and we facilitate getting them the necessary permissions for the appropriate privileges. So, Samantha, why don't you tell us what's required for an unused drawback program? For an unused drawback program, we apply for accelerated payment and we also get a waiver of prior notice. And then we could also mention here that there are two types of waivers. There's a retroactive waiver which allows a client to go back without getting into too much detail. You can claim drawback five years back from the date of the submission of the claim. So the retroactive waiver allows them to go backwards from the date of approval and then a prospective waiver allows them to go forward from the date of approval onward in order to cover that entire five year period. So that sort of explains what a waiver of prior notices. What about an accelerated payment? What it is that, Samantha? The accelerated payment allows for payment of the claim in 45 days as opposed to waiting for the liquidation. Right. And so without without having accelerated payment. Can you tell us how long it could possibly take for a claimant to get paid? Yes. So without accelerated payment, a claim will be paid upon liquidation. And the typical liquidation cycle is 314 days. But customs is allowed to expand that up to three times, so it could possibly take four years to get paid without having that accelerated payment. Right. Which is a long time to wait when you want your money back. So we we strongly encourage everybody to file for accelerated payment. So we talked a little bit about what's required for an unused program. Excuse me, but what what would we apply for? For clients who have a manufacturing program? For manufacturing program, the requirements are a rolling and accelerated payment. So the accelerated payment would be similar as to what's required for unused. Can you tell us about the two different types of rulings that might come into play? Yes. So there's two different types of rulings for a manufacturing program, and they will generate the information required. There's a general ruling. This is submitted to the SES where the claimant will be filing drawback. A manufacturer or producer engaged in an operation that falls within the published general manufacturing drawback ruling may submit a letter of notification of intent to operate under that general ruling. And then what about. So that's a general drawback ruling. What about a specific drawback ruling? The specific drawback ruling is submitted to headquarters in Washington DC and a manufacturer producer of articles intended to be claimed for drawback must apply for a specific manufacturing ruling if their operations do not fall under a general manufacturing ruling. Okay, so we submit, depending on the type of program, we submit, all the necessary permission requests and we get those all into customs with the help of our client to give us the information that's required in those application forms. So what happens once the applications go in. Once the applications go in there and as pending and the new claimant may begin filing claims? Okay. And then so often Customs will come back with questions. And how are those questions handled? If Customs comes back with questions on the submitted rulings and applications, the assigned tariff manager will respond. But we may need some clarification and assistance from the client. Right. So it's important for prospective clients to know that, you know, they're not off the hook. Once we get the initial bunch of information, we may come back because we don't know your business like you know your business. So if Customs requests another document or another piece of information, the tariff manager item may come back to you and request something further. After the initial setup. So once the applications are pending and we're waiting for customs to approve them, a new claimant can be in filing the drawback claims. And we're going to bring Tracy in at this point, having the experience as a tariff manager and also now as our operations manager. Tracy, can you tell people what type of data is required in order to claim drawback. The import data we need to prepare a job. A claim can be found on the 75 oh ones. Their corresponding import invoices and packing lists if they have them. The export data. We need to prepare a job. A claim can be found on the export bills of leading fisheries, export it to Canada. The B three is the Canada's version of our 7501 or pimentos exported to Mexico. Again, the panda mentos aren't Mexico's version of the 7501. We also need the export commercial invoices that go with those bills of bleeding for manufacturing programs. We need a bill of materials. This is basically a recipe of all the exported manufactured items on which you want to claim. Drawback This tells us how much of each raw material is used in the manufacturing process to make one unit of the finished good that is exported. Now there are other data that we need depending on the drawback program for non manufacturing programs. If your import part number differs from your export part number, we would need an alternate part list connecting the import to the export. If you reconcile your imports and you want to claim drawback on the higher reconciled amount, we will need the pre recon and post refund information if an import has been revised or if a post summary correction was filed. We need to know and we need the revised documents. If you are not the importer of record on the 75 or one, we will need a transfer letter from the importer of record, allowing you to claim drawback on those import entries. If you are not the exporter of record, you will need an assignment of drawback rates from the exporter, allowing you to claim drawback on those exports. Because according to the drawback law, the exporter of record is the one entitled to the drawback. Great. Thanks, Tracey. Now we know why you're in charge of all the meticulous data, because you are very detail oriented. It's a lot of data. It is a lot of data. So how can we accumulate this information? What is the best way for our clients or what are the options for our clients in sending us the data. So a client can provide physical documentation? Which item will then enter into our spreadsheets and clients can provide the data electronically if they happen to have access to that information. Okay. And we have a full clerical staff who all day long all they do is enter data from 75 funds and bills, lading and invoices into spreadsheets, which leads me right into our next area. So when we receive the data or when our clerical staff has entered it into the spreadsheets, what do we do with it then? So a tariff manager will obviously check the clerical work and make sure the spreadsheets are correct and then they will send it to me. I will then also audit the data. When the audit is complete, I will load the data into our drawback software item uses duty calls, which is a customs approved drawback software program. I'm using duty calc. I then create a drawback claim by entering the required data for the claim depending on the program, duty calc matches up the exports to the eligible imports to generate a claim. Duty Calc also creates an API file and CBP is required. Format API stands for automated broker interface and then take that FBI file and submitted electronically to S, which stands for automated Commercial Environment. And I think it's really important to just mention that because we're dealing with customs and because we're asking for money back from customs, it's really important that the data is correct and the integrity of the drawback claim is correct. And Tracey, you alluded to it and allude to you told us that in-house we triple check the data. And then the last area of defense is submission via ACE. And ACE has all that data. So when it's submitted via ACE, that's our last area that we can ensure that the data is accurate, which is the most important thing. And you will both agree that we say all the time and correct the first time. We're all about accuracy over here. So all the data has been accumulated, the claims have been submitted. Samantha, can you tell us how long it typically takes for the applications and the rulings to be approved? Yes. So Customs has gone through a lot of changes. There's a new drop back law called Tip Tia. They implemented this in 2019 and they also have implemented the CS. So at this time it typically takes about 3 to 6 months, but more to the longer side. Right. And I think it also depends on which SI center of expertize and excellence you're dealing with. Some are more expeditious than others, but that's about the timeline that we're seeing here. But as we mentioned earlier, once you submit the approvals, you can file the claims so that you're not losing any of your potential drawback. But let's say it's three months and our client receives the approval. Tracy How do we proceed at that point? So as soon as the applications are submitted, we can start filing drop out claims, but they just won't be paid until the rulings and the privilege applications are approved. And we can file at the time, we can file trial that claims on exports and imports that are at least five years old. The filing frequency depends on the claimant and their program. For some clients, we file drawback claims covering a year of exports. For others, we file claims on a month's worth of exports. Customs also, unfortunately, limits the number of exports and imports used in a claim. So a month's worth of data may yield for drawback claims. Right? So it depends on the size of the import export activity and the amount and the number of claims current. So I think we've given everybody an overview of sort of what the process looks like at ITM when people sign on and want us to help them with their drawback program. I want to thank Samantha and Tracy for joining me today. I hope that we can sit down and have more conversations in the future, and I hope that our conversation has given the listeners insight into not only what it's like to work with ITM, but also what the process is like for the client. And I thank you our listeners and be on the lookout and please join us in the future for more podcasts. We hope you've gained some valuable insight into the world of customs tariffs. With all the supply chain challenges the world is facing, our aim is to maximize your duty, drawback dollars and boost your bottom line. We hope you'll subscribe to our podcast to stay current with each new episode in which will unveil numerous ways to improve your international trade profitability. Thanks for listening.