Modifications to the Collections Process for Deferred Tax Payments on Consumption Entries of Distilled Spirits, Wines, and Beer Imported Into the United States, 22696-22700 [2021-08925]

Agencies

• DEPARTMENT OF HOMELAND SECURITY
• U.S. Customs and Border Protection

[Federal Register Volume 86, Number 81 (Thursday, April 29, 2021)]
[Notices]
[Pages 22696-22700]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-08925]


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DEPARTMENT OF HOMELAND SECURITY

U.S. Customs and Border Protection


Modifications to the Collections Process for Deferred Tax 
Payments on Consumption Entries of Distilled Spirits, Wines, and Beer 
Imported Into the United States

AGENCY: U.S. Customs and Border Protection, Department of Homeland 
Security.

ACTION: General notice.

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SUMMARY: This document announces that U.S. Customs and Border 
Protection (CBP) is modifying the collections process for deferred 
payments of internal revenue taxes owed on consumption entries of 
distilled spirits, wines, and beer imported into the United States 
(other than in bulk containers). The primary modification announced in 
this notice is the harmonization of the determination of the due date 
for deferred tax payments with the entry summary date. Another 
modification is the consolidation of all

[[Page 22697]]

deferred tax entry bills from all ports of entry for one semi-monthly 
period into consolidated bill(s) viewable in the Automated Commercial 
Environment (ACE). CBP is further facilitating deferred tax payments by 
removing current policy restrictions on the filing of entries with 
deferred taxes and eliminating the now unnecessary Semi-Monthly Excise 
Tax Form (Greater than 50) for importers who pay deferred taxes through 
Pay.gov. Lastly, CBP is adding a new payment method for deferred taxes 
in ACE while also eliminating a current, but lesser-used payment method 
available through Fedwire.

DATES: The modifications to the collections process for deferred taxes 
that are announced in this notice will become operational on May 1, 
2021, except for the elimination of the current payment method using 
Fedwire. To allow Fedwire users time to convert to a different payment 
method, CBP is granting a longer transition period through June 30, 
2021. As of July 1, 2021, CBP will no longer accept payments of 
deferred taxes through Fedwire.

ADDRESSES: Comments concerning this notice may be submitted at any time 
via email to the ACE Collections Team, Investment Analysis Office, 
Office of Finance, U.S. Customs and Border Protection, at 
[email protected], with a subject line identifier reading 
``Processing of Deferred Tax Payments.''

FOR FURTHER INFORMATION CONTACT: Steven J. Grayson, Program Manager, 
Investment Analysis Office, Office of Finance, U.S. Customs and Border 
Protection, at (202) 579-4400, or [email protected].

SUPPLEMENTARY INFORMATION: 

I. Background Regarding the Ongoing Modernization of the Collections 
System

    U.S. Customs and Border Protection (CBP) is modernizing its 
collections system, allowing CBP to eventually retire the Automated 
Commercial System (ACS) and transfer all collections processes into the 
Automated Commercial Environment (ACE). This modernization effort, 
known as ACE Collections, includes the consolidation of the entire 
collections system into the ACE framework, which will enable CBP to 
utilize trade data from ACE modules, benefitting both the trade 
community and CBP. The new collections system in ACE will reduce costs 
for CBP, create a common framework that aligns with other initiatives 
to reduce manual collection processes, and provide additional 
flexibility to allow for future technological enhancements. ACE 
Collections will also provide the public with more streamlined and 
better automated payment processes with CBP, including better 
visibility to data regarding specific transactions.
    ACE Collections supports the goals of the Customs Modernization Act 
(Pub. L. 103-182, 107 Stat. 2057, 2170, December 8, 1993, Title VI of 
the North American Free Trade Agreement Implementation Act) of 
modernizing the business processes that are essential to securing U.S. 
borders, speeding up the flow of legitimate shipments, and targeting 
illicit goods that require scrutiny. ACE Collections also fulfills the 
objectives of Executive Order 13659 (79 FR 10655, February 25, 2014) to 
provide the trade community with an integrated CBP trade system that 
facilitates trade from entry of goods to receipt of duties, taxes, and 
fees.
    CBP is implementing ACE Collections through phased releases in ACE. 
Release 1, which was deployed on September 7, 2019, dealt with 
statements integration, the collections information repository (CIR) 
framework, and ACH (automated clearinghouse) processing. See 84 FR 
46749 and 84 FR 46678 (September 5, 2019), and 84 FR 49650 (September 
23, 2019). Release 2 was deployed on February 5, 2021, and focused on 
non-ACH electronic receivables and collections, such as Fedwire, 
Pay.gov, Harbor Maintenance Fee (HMF) and Seized Assets and Case 
Tracking System (SEACATS) payments, and broker fees. All of the changes 
in Release 2 were internal to CBP and did not affect the trade 
community.
    As explained more fully below, Release 3 will be deployed on May 1, 
2021, and focuses on billing and debt collection. It includes mainly 
internal, technical changes to the liquidation process, bills, and user 
fees, and also makes the modifications to the collections process for 
deferred tax payments that are announced and explained in this notice. 
The changes for deferred tax will benefit importers by providing 
flexibility for how to make their tax payments and access to data 
regarding which entries are covered by specific bills and payments. 
Additional releases will follow, and any further changes affecting the 
trade community will be announced by notice in the Federal Register, as 
needed.

II. Modifications to Processing of Deferred Tax Payments for 
Consumption Entries of Imported Alcoholic Beverages

    The CBP regulations provide an optional method for the payment of 
estimated import taxes on distilled spirits, wines, and beer imported 
into the United States (other than in bulk containers) (hereinafter 
referred to as ``alcoholic beverages''). Specifically, an importer, 
including a transferee of alcoholic beverages in a Customs bonded 
warehouse, may pay on a semi-monthly basis the estimated import taxes 
on alcoholic beverages entered, or withdrawn from warehouse, for 
consumption, subject to the requirements in section 24.4 of title 19 of 
the Code of Federal Regulations (19 CFR 24.4).
    Consistent with 19 CFR 24.4 and other applicable regulations, this 
notice announces six modifications to the processing of deferred 
payments of internal revenue tax owed on consumption entries of 
alcoholic beverages (hereinafter referred to as ``deferred tax 
payments''). The primary modification is regarding the determination of 
the deferred tax payment due date, which is being harmonized with the 
entry summary date. In addition, CBP is consolidating all deferred tax 
entry bills from all ports of entry for one semi-monthly period into 
consolidated bill(s) viewable in ACE, with more detailed information 
available for viewing via an importer's ACE Portal account. Other 
modifications that facilitate deferred tax payments include simplified 
requirements for importers to file entries with deferred taxes at all 
ports of entry; the elimination of the now unnecessary Semi-Monthly 
Excise Tax Form (Greater than 50) for importers who pay deferred taxes 
through Pay.gov; the addition of a new electronic payment method, using 
ACH debit and ACH credit via the Automated Broker Interface (ABI) in 
ACE; and, the elimination of a current, but lesser-used electronic 
payment method available through Fedwire.
    CBP is making the modifications described above to streamline the 
collections system and facilitate the process for importers for making 
deferred tax payments. CBP has reviewed and assessed the collections 
requirements from fiscal year (FY) 2018, and after a thorough 
evaluation, identified the requirements and modernization opportunities 
to support users of CBP's collections system. Throughout this 
evaluation, CBP has collaborated with stakeholders within CBP, as well 
as members of the trade community, and received valuable feedback, 
which was incorporated in the new ACE Collections requirements for 
deferred tax payments. The modifications announced in this notice will 
become operational on May 1, 2021, except for the elimination of

[[Page 22698]]

Fedwire as a payment method. As of July 1, 2021, CBP will no longer 
accept payments of deferred taxes through Fedwire. A more detailed 
description of each of the modifications follows below.

A. Harmonization of the Determination of the Due Date for Deferred Tax 
Payments

    An importer must pay internal revenue taxes on importations of 
alcoholic beverages pursuant to 26 U.S.C. 5061. See generally, 19 CFR 
141.1 and 141.3, regarding the importer's obligations to pay these 
taxes upon entry of merchandise imported into the United States. 
According to the Internal Revenue Code, the last day for an importer to 
pay the tax levied on consumption entries of alcoholic beverages is the 
14th day after the last day of the semi-monthly period during which the 
article is entered into the customs territory of the United States. 26 
U.S.C. 5061(d)(2)(A). Under CBP regulations, an importer may choose to 
pay internal revenue taxes on imported alcoholic beverages at the time 
of entry or to apply for approval to defer the taxes and pay on a semi-
monthly basis pursuant to 19 CFR 24.4(b). If an importer is approved by 
CBP for deferred tax payments, CBP's current practice is to use the 
date of entry (which is typically the time that merchandise is released 
from CBP custody) to set the semi-monthly period and thus determine the 
due date for an importer's payment of internal revenue taxes on 
consumption entries.
    Currently, deferred tax payments are due on the 14th day after the 
last day of the semi-monthly period in which distilled spirits, wines, 
and beer are entered, or withdrawn from warehouse, for consumption. 
However, the entry summary date generally establishes the time of entry 
for goods in many instances, such as when goods are withdrawn for 
consumption from bonded warehouses, when goods are subject to quotas or 
immediate delivery procedures, and when the entry summary serves as the 
entry and entry summary, or when entries are certified from summary.
    To streamline the collections process, this notice announces the 
harmonization of CBP's operations for determining the due date of 
deferred tax payments on consumption entries of imported alcoholic 
beverages. CBP will use the entry summary date when the entry summary 
is filed timely to fix the semi-monthly period under 26 U.S.C. 
5061(d)(2)(A), and thus set the due date for the payment of deferred 
taxes. Where applicable, deferred tax payments will be due on the 14th 
day after the last day of the semi-monthly period in which the entry 
summary date falls. Using the entry summary date to determine the date 
of payment when the entry summary date establishes the time of entry 
remains within the scope of the current CBP regulations.\1\ Further, in 
some instances, the entry summary documentation may contain information 
that enhances CBP's ability to assess and collect internal revenue 
taxes, and thus, it is more operationally sound for CBP to rely upon 
timely submitted entry summary data to fix the semi-monthly period 
under 26 U.S.C. 5061(d)(2)(A). With this streamlined approach, CBP will 
be able to produce a more accurate bill for deferred taxes. It is 
important to note that the use of the entry summary date does not 
interfere with an importer's ability to pay the deferred taxes early. 
Early payment will still be allowed, but it will not change the semi-
monthly period (which will be fixed based on the entry summary date 
when timely).
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    \1\ CBP notes that this change does not affect the applicability 
of the special rule set forth in 26 U.S.C. 5061(d)(6), which states 
that if the due date under 26 U.S.C. 5061(d) falls on a Saturday, 
Sunday, or a legal holiday, the due date for tax payment will be the 
immediately preceding day which is not a Saturday, Sunday, or 
holiday (or the immediately following day if the due date described 
in 26 U.S.C. 5061(d)(5) falls on a Sunday).
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B. Issuance of a Consolidated Bill (CBP Form 6084) and Availability of 
Detailed Billing Information in ACE Reports

    Currently, an importer who requests to receive a physical (hard 
copy) bill will receive a CBP Form 6084 by mail for each entry upon 
which the importer owes deferred taxes.\2\ As a result, an importer who 
makes such a request may receive multiple, individual bills per payment 
period for each port where the importer filed entries with deferred 
taxes. Alternatively, an importer who does not wish to receive physical 
bills must identify and track its individual entries and the total 
amount of deferred taxes owed for one semi-monthly period in order to 
accurately pay the taxes owed. CBP notes that the majority of importers 
who pay deferred taxes elect not to receive physical bills and, 
instead, they track the amounts owed within their own internal systems.
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    \2\ An importer may request that CBP send a physical (hard copy) 
bill by mail by specifying a particular code when filing an entry 
with deferred taxes via ABI in ACE. For additional information, see 
the CBP and Trade Automated Interface Requirements (CATAIR), 
specifically the chapter entitled Entry Summary Create/Update, which 
is available online at: https://www.cbp.gov/document/technical-documentation/entry-summary-createupdate-catair-draft.
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    To streamline the billing process and provide more transparency for 
importers, this notice announces that every importer who files entries 
with deferred taxes will receive one or more consolidated bills in ACE 
for each semi-monthly period. Consolidation into one bill is applicable 
to an importer who self-files (or employs a single licensed customs 
broker) and uses the same bond to cover all entries filed with deferred 
taxes in a particular semi-monthly period. However, multiple 
consolidated bills will be issued when, in a particular semi-monthly 
period, an importer: self-files and employs a licensed customs 
broker(s) to file entries on the importer's behalf; employs multiple 
licensed customs brokers to file entries on the importer's behalf; and/
or uses multiple bonds to cover the entries. In short, the 
consolidation is per importer of record number/per filer code/per bond 
number for a semi-monthly period.
    The consolidated bills will be viewable only in ACE and will also 
include a consolidated bill number for reference. An importer may use 
the consolidated bill number to easily view all of the covered entries 
and the total amount of taxes owed in a semi-monthly period in ACE 
Reports, which is the data repository for ACE Collections. Only 
importers who have an ACE Portal account will be able to view the 
consolidated billing data in ACE Reports. CBP encourages importers who 
do not already have an ACE Portal account to apply for access to be 
able to view the necessary data to make accurate payments of deferred 
tax.\3\ CBP will work with importers to provide any needed support when 
setting up ACE Portal accounts.
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    \3\ The step-by-step instructions to apply for an ACE Portal 
account are available online at: https://www.cbp.gov/trade/automated/getting-started/portal-applying.
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    Please note that while importers may continue to request to receive 
physical bills by mail for each entry upon which deferred taxes are 
owed at this time, CBP is advising that physical bills will likely be 
consolidated in a future deployment in ACE Collections. Like the 
consolidated bills in ACE, the consolidated physical bills are expected 
to include a reference number (without identifying all of the 
individual entries). To view all of the covered entries and the total 
amount of taxes owed in a semi-monthly period, importers who receive 
consolidated physical bills would need to have an ACE Portal account to 
access the data in ACE Reports.
    The availability of consolidated bills in ACE will reduce the 
amount of time that importers have spent in the past on identifying and 
tracking individual

[[Page 22699]]

entries, and determining the total amount owed for one semi-monthly 
period. Another anticipated benefit is the potential reduction of the 
number of items held temporarily on the budget clearing account (BCA) 
\4\ until a payment has been matched to an entry bill. Because a 
consolidated bill must be paid in full to show each individual entry as 
paid, and before post-summary corrections may be filed, it is expected 
that this change will reduce the number of items on the BCA. This will, 
in turn, increase visibility of individual entries paid and provide a 
more timely and accurate billing and collection process. Lastly, CBP 
notes that this consolidation of bills is also consistent with 19 CFR 
24.4(f), which does not limit deferred tax bills to one entry number 
per bill.
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    \4\ A budget clearing account (BCA) is an account that is used 
to deposit funds that are not immediately identifiable to be matched 
to an open receivable.
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C. Expansion of Filing of Deferred Taxes to All Ports

    Currently, an importer may file for approval to make deferred tax 
payments with the Center of Excellence and Expertise (Center) director, 
either at a port of entry or electronically (19 CFR 24.4(a)).\5\ 
However, the process for an importer to pay deferred taxes is not 
similarly centralized. In order to file entries with deferred tax, an 
importer must submit those entries at each port of entry where the 
merchandise is entered. As a result, an importer who wishes to import 
entries with deferred tax at multiple ports must file the deferred tax 
entries at each of those ports.
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    \5\ CBP recently made regulatory changes to 19 CFR 24.4, which 
transitioned the processing of tax deferral approval requests from 
the ports to the Centers. See 81 FR 92978 (December 20, 2016)
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    In order to facilitate the deferred tax payment process for 
importers, this notice announces that an importer is able to file 
entries with deferred taxes at any port nationwide. This change 
provides convenience to the importers when filing entries with deferred 
taxes as they are no longer limited to a particular port. CBP notes 
that the expansion of filing of deferred taxes to all ports is also 
consistent with 19 CFR 24.4, which does not require the use of a 
specific port for making deferred tax payments.

D. Elimination of Semi-Monthly Excise Tax Form (Greater Than 50) and 
Automatic Payment Processing

    Currently, an importer may use the Semi-Monthly Excise Tax Form 
(Greater than 50), which can be found on Pay.gov, when making deferred 
tax payments for more than 50 entries on Pay.gov.\6\ To properly 
complete this form, an importer must manage its own tracking system to 
keep count of the amount of deferred taxes owed on the entries for a 
specific semi-monthly period. This is necessary because ACE lists only 
the individual entries with deferred taxes owed, but not the total 
amount owed. When making a payment for the total amount of deferred 
taxes for all the entries on Pay.gov, the importer must include an 
attachment that lists all the entries covered, along with the Semi-
Monthly Excise Tax Form (Greater than 50). Not only is an importer 
burdened with the process of identifying and tracking entries, 
determining the total amount owed and submitting two types of 
documentation, but so is CBP. After payment, CBP manually processes 
each entry and associated payment by the importer by keying in the bill 
number for each unique entry in ACE.
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    \6\ As noted elsewhere in this notice, an importer currently has 
the option of paying deferred taxes using ACH debit on Pay.gov or 
Fedwire. When using Fedwire, the Semi-Monthly Excise Tax Forms for 
Greater than 50, and 50 and Under are not used. Instead, the 
importer transmits the relevant information in a separate email. 
Thus, the elimination of the Semi-Monthly Excise Tax Form (Greater 
than 50) announced in this notice is only relevant when payment is 
made on Pay.gov.
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    This notice announces that CBP is eliminating the Semi-Monthly 
Excise Tax Form (Greater than 50) as it is no longer needed due to the 
change in the bill format to allow for consolidated billing, as 
described above. For a consolidated bill, an importer will make one 
lump sum payment of the consolidated amount on Pay.gov, referencing the 
consolidated bill number. Please note that an importer who continues to 
request to receive physical bills by mail will need to identify and 
track individual entries for each semi-monthly period to determine the 
taxes owed, and, in addition, contact CBP (at 
[email protected]) to obtain the consolidated bill number to 
provide when making tax payments on Pay.gov. CBP encourages importers 
to avoid this more cumbersome process by applying for access to an ACE 
Portal account for full viewing capacity for consolidated bills.
    Despite the elimination of the now unnecessary Semi-Monthly Excise 
Tax Form (Greater than 50), CBP will continue to make available the 
Semi-Monthly Excise Tax Form (50 and Under) for importers making 
payments on Pay.gov. Importers will no longer need to list individual 
entries on this form, but only the consolidated bill number(s) and 
dollar amount(s). As soon as the payment is made on Pay.gov, the 
payment will be posted the same night in ACE, and the payment of all 
taxes within one consolidated bill will automatically be matched to 
each entry from the CIR file. This programming change to allow for 
automated processing will save CBP resources that were previously used 
for manual data entry, reconciliation, and other manual processes, and 
will also promote faster processing times of the taxes owed.

E. Addition of a New Payment Method of ACH Debit and ACH Credit via ABI 
in ACE

    Currently, importers may use ACH debit on Pay.gov or Fedwire for 
the payment of deferred taxes. An importer who chooses to use Pay.gov 
will initiate the payment and select the next business day as the 
earliest payment date or a later date. An importer who chooses to use 
Fedwire will initiate a payment the same day up to the cutoff time 
established by the bank used by the importer. Under both payment 
options, the settlement date is recorded as the collection date for the 
payment.
    This notice announces that CBP is making available to importers an 
additional electronic payment method (for both ACH debit and ACH 
credit) via ABI in ACE for the payment of deferred taxes. In the case 
of payment by ACH debit, the importer may initiate a debit 
authorization through ACE, and the authorization date (which may be 
earlier than the settlement date) will be recorded as the collection 
date (to be consistent with the collection date for ACE payments for 
statements). See 84 FR 46678 (September 5, 2019). In the case of 
payment by ACH credit via an authorization in ACE, the importer may 
initiate the credit transaction through its financial institution, and 
the bank post date (which is the same as the settlement date) will be 
recorded as the collection date for the payment (to be consistent with 
the collection date for ACE payments for statements). See https://www.cbp.gov/trade/basic-import-export/automated-clearinghouse-ach.
    The updated ACE programming instructions and instructions regarding 
the format for making payments via ABI in ACE are available in a new 
CBP and Trade Automated Interface Requirements (CATAIR) document 
entitled ``ACE Automated Broker Interface Automated Interface 
Requirements''. See https://www.cbp.gov/document/guidance/draft-ace-catair-ach-debit-authorizationentry-summary-presentation. Also, the 
current payment method for ACH debit available through Pay.gov will not

[[Page 22700]]

change and will continue to be available for the payment of deferred 
taxes.\7\
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    \7\ For guidance on using Pay.gov, go to https://www.cbp.gov/trade/basic-import-export/acceptable-electronic-payment-methods, 
click on the Pay.gov link and on the Pay.gov website, choose the 
applicable CBP form for making a payment.
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F. Elimination of a Current Payment Method Using Fedwire

    This notice announces that CBP will eliminate the current payment 
method for Fedwire, which is a lesser-used method than another payment 
method available to importers through Pay.gov. Currently, CBP manually 
posts the deferred tax payments received through Fedwire, requiring 
additional CBP resources for data entry and processing. Even though the 
payment process is electronic for importers, the use of Fedwire places 
a significant burden on CBP. By eliminating the manual processing of 
Fedwire payments, CBP will conserve resources that can be used for 
other aspects of payment processing. Moreover, CBP is providing 
importers with a new payment method for ACH debit and ACH credit via 
ABI in ACE, in addition to the already existing payment method for ACH 
debit in Pay.gov. Accordingly, importers will continue to have multiple 
convenient options to choose from when making deferred tax payments.
    To enable those importers who currently use Fedwire to switch their 
payment method to Pay.gov or the new option available for ACH debit or 
ACH credit via ABI, CBP is announcing a transition period. Fedwire will 
continue to be available as a payment method through June 30, 2021. 
This transition period will allow for importers who have been using 
Fedwire as their preferred payment method to adjust their business 
processes for the use of another payment method. CBP will work with 
importers to provide any needed support during the transition period. 
As of July 1, 2021, CBP will no longer accept payments of deferred 
taxes through Fedwire.

    Dated: April 23, 2021.
Jeffrey Caine,
Chief Financial Officer, U.S. Customs and Border Protection.
[FR Doc. 2021-08925 Filed 4-28-21; 8:45 am]
BILLING CODE 9111-14-P