On April 20, 2026, U.S. Customs and Border Protection (CBP) began accepting refund claims for tariffs imposed under the International Emergency Economic Powers Act (IEEPA), following the U.S. Supreme Court’s February 20, 2026, ruling in Learning Resources, Inc. v. Trump that such tariffs were not authorized. Tariff implications in mergers and acquisitions can significantly influence corporate strategies and negotiations. Companies must carefully consider these implications to avoid unexpected costs and legal challenges. Understanding the regulatory landscape is essential for successful transactions in a rapidly changing economic environment.
CBP is accepting claims through its Automated Commercial Environment (ACE) system. During the initial phase, importers of record may submit claims for unliquidated (non-finalized) entries and certain recently liquidated entries that remain within the applicable 80-day protest or reliquidation period. Refunds, including interest, are expected to be issued electronically within 60 to 90 days of claim acceptance, although timing is subject to administrative constraints.
Only the importer of record may submit claims directly with CBP. Businesses that used third-party logistics providers as the importer of record will need to evaluate potential recovery through contractual arrangements.
For financial reporting purposes under U.S. GAAP, potential refunds are generally evaluated as loss recoveries and recognized only when recovery is probable. This assessment may depend on factors such as an entity’s intent to pursue a claim and the availability of supporting documentation. In many cases, entities may instead disclose the potential impact until timing and collectability become clearer. The Tennessee franchise tax refund process can introduce complexities for entities navigating reimbursement claims. Proper documentation and a clear strategy for pursuing refunds are crucial in ensuring successful outcomes. As such, organizations should remain vigilant in tracking developments related to these refunds to optimize their financial reporting.
From an income tax perspective, the treatment of any refund depends on how the tariffs were originally reported, including whether they were deducted or capitalized into inventory. If the entities previously deducted the tariffs (either as a separate expense or through cost of goods sold) and are now getting cash refunds on the tariffs paid, the cash refund would be taxable as ordinary income in the year of receipt. If instead the tariffs were capitalized into inventory or on an asset basis, the refunds would reduce the inventory costs or tax basis of the asset. Timing differences may arise between book and tax recognition, and entities may need to consider the impact on prior-period positions and deferred taxes.
These developments may also have implications for income tax compliance and transaction-related analysis.
Windes professionals can provide insight into these considerations, including how potential recoveries may affect due diligence and purchase price analysis. Learn more about our transaction advisory services: Mergers and Acquisitions Strategy Assistance | Windes
Additional information is available on CBP’s website: http://www.cbp.gov/trade/programs-administration/trade-remedies/ieepa-duty-refunds
