What are Drawbacks?
Drawbacks are refunds that are due on imports which were charged duty fees, certain internal revenue taxes, or other fees and eventually exported or destroyed.
For example, if a Chicago based manufacturer imports fabric from Asia to make doll clothing, the manufacturer pays import fees on that fabric when it is imported. If the manufacturer then exports the doll clothing to Europe for retail sale, then the company is eligible for drawbacks on the fees paid at the initial import.
Additionally, if the doll clothing is destroyed, the company is then also eligible for drawbacks.
Importers and exporters spend billions of dollars in duty fees, taxes and other fees each year; some of that money may be eligible for refunds through drawbacks. On average 70%, or roughly $3 billion dollars, of refundable duties remain unclaimed every year.
Kaufman Logistics’ unique in-house automated technology has helped our clients all over the U.S. reclaim hundreds of thousands of dollars in prepaid fees which would have otherwise been left unclaimed. When drawbacks are utilized to their full potential, business’s bottom lines benefit, at times, substantially.
There is really no downside to drawbacks. They are simply funds that have been lawfully paid and are later eligible for refunds on those funds. They simply require a little expert industry knowledge, that’s what we’re here for.
At Kaufman Logistics, we’re the drawback experts. We take the complication and confusion out of drawbacks, ensuring that our clients receive the maximum benefit.
Our state-of-the-art system works with every type drawback and includes:
- Fully automated drawback filing through ACE
- Full history of status
- Data compliance
- Document filing
- File for drawback program for expedited refunds
Industries That Benefit from Drawbacks
Any industry which depends on exports of merchandise into foreign markets for sale, can benefit from drawbacks. Drawbacks allow goods that are typically subject to potentially high import duties, which would in turn increase retail prices, to be sold at much more competitive rates. Without duty drawbacks, exporters face the potential of being priced out of their target markets.
Kaufman – The Trusted Duty Drawback Experts
Kaufman’s team of experts ensures your business gets the most out of drawbacks, we’ll find every cent that can be reclaimed. We’re not only highly skilled in drawback regulations, but we’re committed to customer service. Trust Kaufman with your duty drawback needs, contact us to see if you qualify and how we can help you reclaim funds for your business.
Types of Drawbacks
Direct Identification Manufacturing
Up to 99% of duties are recoverable when goods are manufactured in the US and used with imported goods and later exported or destroyed.
When imported merchandise and any other similar kind and quality of merchandise are used to manufacture goods and then are either exported or destroyed before use, drawbacks equal to or less than 99% of the duty paid on the imported articles may be payable on the exported or destroyed articles.
Exported merchandise that is deemed of subpar quality or standards, the consignee did not consent to the shipment or does not meet specifications are eligible for up to a 99% drawback.
Internal Revenue Tax
Drawback on internal revenue tax paid on domestic alcohol is available when certain products are manufactured with the use of domestic alcohol and exported.
Meat and Fish Salt
Duties are remitted if imported salt is used to cure fish, if imported salt is used to cure exported meat, then duty fees may be refunded. Amounts less than $100 will not be refunded.
When imported materials are used to produce vessels for foreign entities, then 99% of duty fees may be recovered.
When imported goods are used to repair foreign aircraft, 99% of duty fees may be recovered.
99% of duties, fees and taxes may be recovered if imported merchandise is unused and exported or destroyed under the supervision of US Customs.
Substitution Unused Merchandise
Merchandise that is commercially interchangeable with other imported merchandise that is exported or destroyed under US Customs supervision and at the time of exportation or destruction remained unused, then 99% of all of the duties, taxes or fees may be returned.
Substitution of finished petroleum derivatives
If exports are considered a “qualified article” or are of the same kind and quality as qualified articles, then 99 % of the designated duties paid or attributable to the eligible goods may be recovered.
When imported packaging materials are used for exports or destroyed, 99% drawback is available.
U.S. – Produced Packaging Material
US produced packaging materials that are later used for exported goods or destroyed are eligible for a 99% drawback.
Drawbacks claimed under sections (a), (b), and (c), the term destruction is when materials are recovered from imported merchandise or from a manufactured article from imported merchandise. The amount of duties to be refunded, the value of recovered materials (including the value of any tax benefit or royalty payment) accruing to the drawback claimant will be deducted from the value of the imported merchandise that is destroyed, or from the value of the merchandise use in the manufacture of the article.