IEEPA Tariff Refunds: Q&A for Small Businesses

Introduction

This article explains what small businesses should know if they have paid tariffs imposed under the International Emergency Economic Powers Act (IEEPA). Many businesses may now be entitled to a refund.

This article covers who can file, how the new refund process works, what records businesses should gather, what to do if a supplier or customer absorbed or passed through tariff costs, and when legal help may be useful.

Background

The issue arises from the invalidation of certain IEEPA tariffs and the resulting need for U.S. Customs and Border Protection to process refunds for affected importers. On February 20, 2026, the Supreme Court held in Learning Resources, Inc. v. Trump that IEEPA does not authorize the President to impose IEEPA tariffs, resolving challenges brought by small businesses and states to the IEEPA-based tariff program.

The Court did not itself prescribe the refund mechanics. To address this, CBP created a new refund process through CAPE, short for Consolidated Administration and Processing of Entries, which operates through the existing Automated Commercial Environment, or ACE, system. CBP’s trade notice states that, beginning April 20, 2026, importers and customs brokers will be able to file Phase 1 requests for refunds of IEEPA duties directly through CAPE.

CBP describes CAPE as a process designed to consolidate refunds of IEEPA duties, including interest, rather than process refunds on an entry-by-entry basis. CBP is deploying the process in phases, and Phase 1 is limited to certain eligible entries.

1. What is this refund opportunity?

Businesses that paid IEEPA tariffs may be eligible to seek refunds through CBP’s new IEEPA Duty Refunds process. CAPE is intended to consolidate refund processing for IEEPA duties, including interest, rather than requiring CBP to process refunds on an entry-by-entry basis.

The refund is not automatic. A business generally must identify eligible entries, confirm that the duties were IEEPA duties, and submit a proper claim through ACE/CAPE.

2. Who is eligible?

The threshold question is whether your business was the Importer of Record on the relevant customs entries. If your company was listed as the Importer of Record and paid IEEPA duties, it is likely the party positioned to claim the refund through CAPE.

If a licensed customs broker filed the entries, the broker may be involved in the process. CBP’s CAPE materials describe the system as a pathway for trade users to submit CAPE declarations for IEEPA refunds through ACE.

3. What if my business paid higher prices because of tariffs, but was not the Importer of Record?

That is more complicated. Many small businesses paid tariff costs indirectly through supplier price increases, line-item tariff surcharges, revised contracts, or other pass-through mechanisms. But if the supplier or a related importing entity was the Importer of Record, that entity likely controls the direct CAPE refund claim.

In that situation, recovery may depend on the contracts, purchase orders, invoices, supplier communications, and whether the supplier is willing to file for the refund and pass through an appropriate share.

4. What documents should a business review first?

Start with the documents that show whether your business paid IEEPA duties directly or indirectly:

• customs entry summaries;

• ACE reports;

• broker statements;

• invoices;

• purchase orders;

• supplier contracts;

• tariff surcharge notices;

• price-adjustment clauses;

• communications with suppliers or customers about tariff increases.

The practical goal is to separate true IEEPA duties from other charges. Duties imposed under other authorities, including Section 301 or Section 232 tariffs, antidumping duties, and countervailing duties, should not be mixed into an IEEPA-specific refund claim.

5. What is CAPE?

CAPE stands for Consolidated Administration and Processing of Entries. It is a CBP process designed to streamline IEEPA duty refund claims through ACE.

CBP’s CAPE quick reference materials explain that trade users can submit CAPE declarations for IEEPA refunds through ACE. CBP has also issued a fact sheet on IEEPA refunds, describing CAPE as the tool for batch handling refund declarations.

6. Is every entry eligible right now?

No. The process is being rolled out in phases. CBP’s trade notice states that Phase 1 refund requests began on April 20, 2026.

More complex entries, including older liquidated entries, protested entries, reconciliation entries, or entries requiring post-summary correction, may require separate analysis, later-phase treatment, or protective filings. A business should not assume that every IEEPA-related payment can be recovered through Phase 1.

7. How long will refunds take?

CBP’s official materials describe CAPE as a way to consolidate and streamline IEEPA duty refunds, including interest.

Businesses should still treat refund timing cautiously. Processing depends on the accuracy of the submission, CBP validation, entry status, payment information, and claim volume. A business should not treat the refund as available cash until it has actually been received.

8. What if my company does not have an ACE account?

That can be a practical bottleneck. CAPE is accessed through ACE, and CBP has separate guidance for ACE Portal access and ACH refund authorization. CBP states that, effective February 6, 2026, corporations and individual payees with an ACE Portal account must use the ACH Refund Authorization tab in ACE to manage refund payment instructions.

Small businesses that historically relied entirely on customs brokers may need to coordinate with the broker or establish appropriate ACE access before moving forward.

9. Should we just file as quickly as possible?

Speed matters, but accuracy matters more. A refund filing may prompt a CBP review and could surface unrelated import compliance issues, including classification, valuation, country-of-origin, or recordkeeping problems.

A business should audit its entry data before filing, preserve backup documentation for each claim, and avoid including ineligible tariffs or unsupported entries.

10. What if a supplier received the refund but passed the tariff cost to us?

That should be handled through contract review and a direct demand to the supplier. The strongest position will usually exist where invoices or contracts specifically identify an IEEPA tariff surcharge, tariff pass-through, or price-adjustment mechanism.

If the supplier refuses to cooperate, the business may need to evaluate contract remedies, unjust enrichment theories, or other equitable claims. The analysis will be document-specific.

11. What if my customer demands that we pass the refund through to them?

Do not agree automatically. First, determine whether your pricing to the customer was expressly tied to IEEPA duties. If you charged a separate tariff surcharge or used a price-escalation clause linked to the tariff, the customer may have a stronger argument.

If your prices simply reflected general cost increases, or if you held pricing flat despite the tariffs, the customer’s claim is likely weaker. As a general matter, a downstream customer does not automatically become entitled to a refund simply because the importer later receives one. The contract, invoices, and course of dealing will usually control the analysis.

12. What are the main legal issues a small business should evaluate?

The main issues are:

1. Importer-of-Record status: whether your company has direct authority to submit the CAPE claim.

2. Entry eligibility: whether the entries qualify for the current CAPE phase or require a later-phase or protest strategy.

3. Tariff segregation: whether the claimed amount is limited to IEEPA duties, excluding Section 301, Section 232, AD/CVD, and other charges.

4. Supplier pass-through rights: whether you can recover from a supplier that receives the refund but passed the tariff cost to you.

5. Customer pass-through exposure: whether customers can demand a share of refunds based on contracts, invoices, course of dealing, or equitable arguments.

6. Compliance risk: whether a filing could expose customs classification, valuation, origin, or recordkeeping issues.

13. What else should we look out for?

In a word, scams. Small businesses are being targeted by scammers purportedly attempting to help them with the IEEPA refund process through CAPE. Sometimes, they are merely seeking to gain access to the businesses' bank accounts. This is one reason why small businesses that are inexperienced with the tariff refund process should involve counsel.

14. When should a small business involve counsel?

Legal help is most useful where the business is not simply filing a clean, direct claim as the Importer of Record. Counsel should be involved where:

• Importer-of-Record status is unclear;

• the tariff was passed through by suppliers or to customers;

• entries are liquidated, older, protested, reconciled, or otherwise outside the current CAPE phase;

• the business needs to preserve rights while waiting for later CAPE phases;

• contracts contain tariff, price-adjustment, force majeure, tax, duty, or surcharge provisions;

• the business has customs-compliance exposure;

• the refund amount is large enough to justify a documented legal strategy.

15. What should my business do now?

A practical first step is to create a tariff-refund file. Pull the entry summaries, identify the Importer of Record, isolate IEEPA duties, separate ineligible duties, confirm ACE/CAPE access, and calendar any liquidation- or protest-related deadlines.

For indirect tariff payments, collect supplier and customer contracts, invoices, purchase orders, and tariff-related communications before making demands or responding to refund requests. The businesses best positioned to recover are likely to be those that move promptly, but with clean data and a defensible paper trail.

Do you need assistance with your IEEPA refund? Contact us today to see if we can assist.