Examining the Implications for Businesses and Consumers
This past February, the United States Supreme Court in Learning Resources v. Trump declared certain federal tariffs to be illegal, a decision that has significant financial implications for businesses and consumers alike.
As mentioned in our recently published article, U.S. Customs and Border Protection (CBP) recently launched online tools where importers and brokers can begin the process of submitting refund claims for tariffs they paid but which have been struck-down by the Court.
IEEPA Tariff Refund Process Underway: How to Minimize Risk and Optimize Refunds
Read NowOne key issue arising from these developments is the potential for state sales and use tax (SUT) refunds related to previously collected tariffs. Businesses that paid SUT on imported goods, with the tariffs included in the taxable base, could now be eligible for refunds if those tariffs are retroactively invalidated and refunded.
Typically, SUT is calculated based on the total purchase price of goods, which often includes tariffs imposed at the time of import. With the Supreme Court’s decision, companies that paid both the tariffs and associated SUT and have had their tariffs refunded to them may also seek to recover overpaid SUT. The process for obtaining these refunds will likely vary by state, depending on individual tax codes and refund procedures. In many cases, businesses will need to provide documentation of the original transactions, as well as the amounts of tariffs paid and refunded.
Consumers could also benefit indirectly if businesses pass on the recovered SUT through price adjustments or credits. However, the timeline for these refunds may be lengthy, as states determine how to process claims and set guidelines for eligibility.
To further complicate matters, state rules and processes vary as to who is eligible to request the SUT refund (i.e., the vendor or the customer upon which the tax is imposed), and some states allow the refund to be assigned to the other party and/or require any refund to be paid back to the end user customer.
CBIZ’s SALT experts recommend that affected businesses consult with them to understand their rights, their states’ SUT rules and the necessary steps for filing refund claims. If you or your business paid tariffs and/or SUT on imported goods for which you are or will be seeking refunds from CBP or your vendors, please reach out to a CBIZ SALT team member to discuss your options.
Frequently Asked Questions
The U.S. Supreme Court ruled that certain federal tariffs were imposed illegally, creating significant financial implications for businesses and consumers. As a result, companies that previously paid these tariffs may now be eligible to recover those amounts.
State sales and use tax is typically calculated based on the total purchase price of goods, which often includes tariffs. Since the tariffs have been deemed invalid, businesses that paid SUT on amounts that included those tariffs may be able to seek refunds for overpaid taxes.
The refund process will vary by state, as each has its own tax rules and procedures. Businesses will likely need to provide documentation showing the original transaction details, including the tariffs paid and any refunds received. Additionally, state-specific rules may determine whether the vendor or the customer is eligible to file the claim.
Consumers may benefit indirectly if businesses pass along recovered tax amounts through price reductions or credits. However, the timing and availability of these benefits will depend on how quickly states establish refund processes and how businesses choose to distribute any recovered funds.
© Copyright CBIZ, Inc. All rights reserved. Use of the material contained herein without the express written consent of the firms is prohibited by law. This publication is distributed with the understanding that CBIZ is not rendering legal, accounting or other professional advice. The reader is advised to contact a tax professional prior to taking any action based upon this information. CBIZ assumes no liability whatsoever in connection with the use of this information and assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein. Material contained in this publication is informational and promotional in nature and not intended to be specific financial, tax or consulting advice. Readers are advised to seek professional consultation regarding circumstances affecting their organization.
“CBIZ” is the brand name under which CBIZ CPAs P.C. and CBIZ, Inc. and its subsidiaries, including CBIZ Advisors, LLC, provide professional services. CBIZ CPAs P.C. and CBIZ, Inc. (and its subsidiaries) practice as an alternative practice structure in accordance with the AICPA Code of Professional Conduct and applicable law, regulations, and professional standards. CBIZ CPAs P.C. is a licensed independent CPA firm that provides attest services to its clients. CBIZ, Inc. and its subsidiary entities provide tax, advisory, and consulting services to their clients. CBIZ, Inc. and its subsidiary entities are not licensed CPA firms and, therefore, cannot provide attest services.
IEEPA Tariff Refund Process Underway: How to Minimize Risk and Optimize Refunds
Read NowOne key issue arising from these developments is the potential for state sales and use tax (SUT) refunds related to previously collected tariffs. Businesses that paid SUT on imported goods, with the tariffs included in the taxable base, could now be eligible for refunds if those tariffs are retroactively invalidated and refunded.
Typically, SUT is calculated based on the total purchase price of goods, which often includes tariffs imposed at the time of import. With the Supreme Court’s decision, companies that paid both the tariffs and associated SUT and have had their tariffs refunded to them may also seek to recover overpaid SUT. The process for obtaining these refunds will likely vary by state, depending on individual tax codes and refund procedures. In many cases, businesses will need to provide documentation of the original transactions, as well as the amounts of tariffs paid and refunded.
Consumers could also benefit indirectly if businesses pass on the recovered SUT through price adjustments or credits. However, the timeline for these refunds may be lengthy, as states determine how to process claims and set guidelines for eligibility.
To further complicate matters, state rules and processes vary as to who is eligible to request the SUT refund (i.e., the vendor or the customer upon which the tax is imposed), and some states allow the refund to be assigned to the other party and/or require any refund to be paid back to the end user customer.
CBIZ’s SALT experts recommend that affected businesses consult with them to understand their rights, their states’ SUT rules and the necessary steps for filing refund claims. If you or your business paid tariffs and/or SUT on imported goods for which you are or will be seeking refunds from CBP or your vendors, please reach out to a CBIZ SALT team member to discuss your options.
Frequently Asked Questions
The U.S. Supreme Court ruled that certain federal tariffs were imposed illegally, creating significant financial implications for businesses and consumers. As a result, companies that previously paid these tariffs may now be eligible to recover those amounts.
State sales and use tax is typically calculated based on the total purchase price of goods, which often includes tariffs. Since the tariffs have been deemed invalid, businesses that paid SUT on amounts that included those tariffs may be able to seek refunds for overpaid taxes.
The refund process will vary by state, as each has its own tax rules and procedures. Businesses will likely need to provide documentation showing the original transaction details, including the tariffs paid and any refunds received. Additionally, state-specific rules may determine whether the vendor or the customer is eligible to file the claim.
Consumers may benefit indirectly if businesses pass along recovered tax amounts through price reductions or credits. However, the timing and availability of these benefits will depend on how quickly states establish refund processes and how businesses choose to distribute any recovered funds.
© Copyright CBIZ, Inc. All rights reserved. Use of the material contained herein without the express written consent of the firms is prohibited by law. This publication is distributed with the understanding that CBIZ is not rendering legal, accounting or other professional advice. The reader is advised to contact a tax professional prior to taking any action based upon this information. CBIZ assumes no liability whatsoever in connection with the use of this information and assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein. Material contained in this publication is informational and promotional in nature and not intended to be specific financial, tax or consulting advice. Readers are advised to seek professional consultation regarding circumstances affecting their organization.
“CBIZ” is the brand name under which CBIZ CPAs P.C. and CBIZ, Inc. and its subsidiaries, including CBIZ Advisors, LLC, provide professional services. CBIZ CPAs P.C. and CBIZ, Inc. (and its subsidiaries) practice as an alternative practice structure in accordance with the AICPA Code of Professional Conduct and applicable law, regulations, and professional standards. CBIZ CPAs P.C. is a licensed independent CPA firm that provides attest services to its clients. CBIZ, Inc. and its subsidiary entities provide tax, advisory, and consulting services to their clients. CBIZ, Inc. and its subsidiary entities are not licensed CPA firms and, therefore, cannot provide attest services.
