U.S. Customs and Border Protection (CBP) has amended its regulations to mandate electronic refunds for overpayments of customs duties, fees, taxes, and interest, effective February 6, 2026. This interim final rule, published in the Federal Register on January 2, 2026, aligns with federal statutes and President Trump's Executive Order 14247, issued on March 25, 2025, which directs the modernization of federal payments to combat fraud and improve efficiency. The rule affects importers, brokers, and other trade entities, requiring them to provide banking information through CBP's Automated Commercial Environment (ACE) for Automated Clearing House (ACH) transfers. Comments on the rule are due by March 3, 2026, via the federal eRulemaking Portal. This development addresses rising check fraud and operational inefficiencies, potentially saving millions in costs while enhancing payment security.
Background and Legal Foundation
The rule stems from longstanding statutory obligations under 19 U.S.C. 1505(b), which requires CBP to refund excess deposits within 30 days of liquidation or reliquidation, and 31 U.S.C. 3332(f)(1), mandating electronic funds transfers for most federal payments. President Trump's Executive Order 14247 emphasizes digitizing payments to reduce fraud, noting that check fraud reports nearly doubled from 2021 to 2022 and that paper checks are 16 times more likely to be lost or stolen than electronic transfers, according to a White House fact sheet issued alongside the order.
Historically, CBP issued most refunds as paper checks mailed by the U.S. Treasury, with only about 30 percent processed electronically in 2024 and 2025. The rule builds on CBP's modernization efforts, including enhancements to the ACE Portal, such as the new ACH Refund Authorization tab deployed in September 2025. Key players include CBP's Revenue Division, the U.S. Treasury for payment processing, and importers who must now enroll in ACH via ACE. Relevant precedents include prior CBP initiatives like the 2022 deployment of the Refund ACE Report for transparency in refund tracking.
Key Provisions and Processes
Under the rule, CBP will issue all refunds electronically via ACH, subject to waivers under 31 CFR 208.4 for hardships or other specified circumstances. Importers must create an ACE Portal account if none exists and submit banking details under the ACH Refund Authorization tab. Those already enrolled in ACH refunds will transition seamlessly, while foreign importers without U.S. bank accounts must either open one or designate a third party, such as a broker, using CBP Form 4811.
The rule specifies that no interest accrues under 19 U.S.C. 1505(d) if CBP certifies a refund within 30 days but cannot deliver it due to missing banking information. For waivers, importers must contact CBP's Revenue Division in writing. Amendments affect multiple CFR parts: Part 24 updates refund procedures and removes references to checks; Part 141 revises entry documentation for electronic refunds; Part 159 aligns liquidation processes; and Part 174 allows optional agent designations for refunds.
Economic and Operational Implications
The rule's economic analysis projects net savings of $14.5 million from 2025 to 2034, with annualized savings of about $1.3 million at a three percent discount rate. Short-term costs include $1.5 million in 2025 for IT development in ACE and time burdens for importers to submit ACH information, estimated at 0.133 hours per submission, totaling $2.4 million over the period. CBP anticipates processing up to 448,470 new ACE accounts in 2026, with manual reviews for 20 percent, costing $4.1 million in staff time.
Long-term benefits include eliminating printing and mailing costs for 1.3 million checks, saving $3.4 million, and reducing fraud, which affected 1,393 checks in 2024 valued at $3.98 million. Electronic refunds arrive in one to two business days versus three or more for checks, minimizing opportunity costs for importers. Perspectives vary: Government officials highlight fraud reduction and efficiency, as per the Executive Order's fact sheet, while trade groups may note initial burdens on small importers without ACE accounts. No endorsements are implied, but the rule aligns with broader federal digitization goals.
Regulatory and Procedural Considerations
CBP issued this as an interim final rule under the Administrative Procedure Act's procedural rule exception (5 U.S.C. 553(b)(A)), citing its focus on internal agency processes without altering substantive rights. Good cause under 5 U.S.C. 553(b)(B) justifies bypassing notice and comment due to rising fraud risks and public interest in swift implementation. The rule is not significant under Executive Order 12866 but qualifies as deregulatory under Executive Order 14192, with $28.7 million in perpetual net savings at a seven percent discount. No Paperwork Reduction Act implications arise, as the banking information collection is not a new requirement.
In summary, this rule represents a significant step in modernizing CBP's payment processes, driven by statutory mandates and executive directives to curb fraud and costs. Potential next steps include public comments shaping a final rule, with challenges centering on smooth implementation for small entities and handling rare waivers. Ongoing debates may focus on balancing efficiency gains against transition hurdles, ensuring the rule's goals of security and speed are realized without undue burdens.
