Federal legislation will soon allow some U.S. manufacturers a major tax break. Manufacturers using materials not available here or sold domestically in insufficient quantities can be exempted from federal tariff payments. Currently, manufacturing imports require full duty payments.

In May 2016, Congress directed the International Trade Commission to establish a process for U.S. manufacturers to seek relief from duties on imported goods necessary for their production. Such tariffs currently are imposed by the Harmonized Tariff Schedule of the United States.

Since 2012, the Schedule has not been updated by Congress with miscellaneous tariff bills, or MTBs. In the absence of MTBs, manufacturers have been paying the entirety of import tariffs. The National Association of Manufacturers estimates this cost to U.S. businesses a total of $748 million. If your business has contributed to this balance, you soon will be able to petition to avoid these tariff payments on future purchases.

The ITC posted draft submission forms for comment on its website in mid-June, 2016. The ITC will provide the final steps in the process manufacturers can use to seek relief by October 15, 2016, after which manufacturers can submit their petitions for relief.

However, simply submitting the form is not a foregone conclusion of tariff relief. The submitted petition has to be analyzed by the ITC to verify that the business truly has exhausted all options and cannot obtain the goods in sufficient quantities in the United States. Therefore, businesses need to carefully prepare the forms and be ready to defend their petitions to the ITC. Having support from legislative and administrative leaders also may be helpful in efforts to include the business on the ITC’s final approved list and to add the petition to the final legislation that ultimately will grant the tariff relief.

Also, timing will be of essence once the submission process begins. The opportunity to petition for the tariff relief is expected only to be offered once every three years, so having knowledgeable manpower and sufficient resources to devote to the project in short order will be critical.

Penelope Farthing is Senior Advisor at Bose Public Affairs Group
Patricia Power is Senior Vice President, Federal Relations at Bose Public Affairs Group

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