Your IEEPA Tariff Refund Arrived. Book It Correctly Before the September 15 Estimate

In May we told readers not to book an IEEPA tariff refund as a receivable until Customs had worked out the mechanics. Customs has. CBP's IEEPA duty refund page, last modified July 20, 2026, describes a process that is now paying money: CAPE declarations filed in ACE, refunds generally issued 60 to 90 days after acceptance, paid by ACH, consolidated by importer of record, and inclusive of statutory interest.

If a government deposit has hit your operating account, or one is coming, the question is how to record it so margins, inventory, and estimated taxes stay right. Here is the working answer; your facts and accounting basis decide the details.

Know what the deposit contains

CBP is explicit that a single ACH can cover many entries and is not a simple sum of the duty you paid. The total for an entry is the refunded IEEPA duty plus interest under 19 U.S.C. § 1505, running from the deposit date to liquidation or reliquidation, netted against any additional duties owed on that entry after CBP reviews classification or value. CBP can also divert refunds to offset undisputed debts to the United States. There is no separate interest payment.

So the first job is reconciliation, not journal entries. Run the ES-022 CAPE Entry Summary Report in the ACE portal; CBP says it links your declaration to entry and refund numbers and separates principal from interest. CBP also references a REV-615 Trade CAPE Detail Refund Report. Tie the deposit to those reports entry by entry before posting.

One more check: refunds go only to the importer of record or the party it named on CBP Form 4811. If a broker, forwarder, or 3PL was importer of record on some entries, the money lands with them. Confirm in writing how and when it is passed through, and reconcile their remittance to the same entry list.

Post the principal where the duty went

Our earlier article on capitalizing tariffs into inventory explains why duties belong in unit cost, not in an operating expense line. The refund follows the same path in reverse. For each refunded entry, use your landed-cost records to determine whether the units are still on hand or have sold.

• Units still in inventory: reduce the carrying cost of that inventory. Leaving the refunded duty in inventory overstates the balance sheet and will overstate cost of goods sold when the units sell.
• Units already sold: the cost already ran through cost of goods sold, usually in 2025 or early 2026. Most brands will present the recovery as a reduction of cost of goods sold in the period recognized, shown separately so gross margin can be read with and without it. Some will present it below gross profit as other income. Pick one treatment with your accountant, document it, and apply it consistently.

Do not spread a 2025 recovery across current-year unit costs; that flatters a margin you will have to defend when the one-time item is gone.

Interest is interest

The interest component is not a product cost. Book it as interest income using the ES-022 split. Keeping it separate matters for lenders reading your margin trend and for tax.

Recognition timing

Under U.S. GAAP, a refund like this is a gain contingency until realized, which is why the May guidance kept it off the balance sheet. Now that CBP accepts claims and pays on a schedule, the practical question is whether you record the asset when a CAPE declaration is accepted with an approved amount or when the cash arrives. Either can be defensible depending on your facts and materiality. Settle the policy once, apply it to every entry, and disclose it in any lender or buyer package.

Entries that were already finally liquidated are outside the two CAPE phases CBP currently describes and remain in litigation. Keep those as a memo item, not a receivable.

The tax timing issue, and why September 15 matters

If the refunded duty was deducted through cost of goods sold on a prior return, the refund is generally taxable income when received, and the interest is taxable as well. If the duty is still in ending inventory for tax purposes, the refund reduces that inventory basis instead. Either way, a large refund received in 2026 can change 2026 taxable income and the safe-harbor math behind your estimated payments.

The third-quarter federal estimate for calendar-year taxpayers is due September 15. If a material refund posted in July or August, re-run the estimate before then rather than finding the shortfall in April. Pass-through owners should check state estimates and any pass-through entity tax payments on the same schedule.

This week

1. Export the ES-022 and REV-615 reports and match every deposit to entries, principal, interest, and netting.
2. Confirm importer-of-record status on every refunded entry and chase refunds paid to a broker or forwarder.
3. Split the principal between units on hand and units sold; reduce inventory or cost of goods sold, and book interest separately.
4. Write down the recognition policy and presentation choice.
5. Send the reconciled totals to your tax preparer before the September 15 estimate.

Treatment varies with your accounting basis, inventory method, state, and whether the refunded entries are final or still open. If you want the deposit tied to entries and posted cleanly before the next close, our monthly accounting team handles landed-cost and tariff reconciliation for importing brands.