How To Eliminate Duties Through New Miscellaneous Tariff Bill
A recently passed bill has U.S. shippers primed to save millions of dollars in tax breaks through tariff reductions and eliminations. You might be able to take advantage of this bill to significantly reduce your import costs.
The Miscellaneous Tariff Bill (MTB), which is also known as the American Manufacturing Competitiveness Act of 2016, is a bipartisan piece of legislation that gets rid of or reduces import duties on raw materials and intermediate products that are not available in the U.S.
The House Ways and Means Committee, which led the way on this legislation, likes to say this bill’s acronym, MTB, also stands for Manufacturing Tax Breaks.
Ultimately, the bill is a tax break for U.S. manufacturers who import materials that are not produced in the U.S. The tax break used to exist, but expired about four years ago, causing a rise in taxes for affected U.S. manufacturers, really hurting their competitiveness.
The last MTB – or manufacturing tax breaks – expired in 2012, so manufacturers have been struggling with higher taxes for several years. According to the National Association of Manufacturers, U.S. companies have been hit by a $748 million tax hike each year, undercutting their ability to compete and costing our economy $2 billion annually.
The new MTB came with reform to the process of getting the this tax break.
There is a three-step process, which includes businesses applying for MTB. The Ways and Means Committee broke it down nicely with an infographic they created:
So in order to be considered for a reduction or elimination of your import duties, you need to petition the International Trade Commission (ITC).
How do you know if your business should apply to the ITC for a tariff reduction or elimination on your imports?
James L. Sawyer and Mollie D. Sitkowski of Drinker Biddle & Reath wrote a great article, published by the National Law Review, about the Miscellaneous Tariff Bill. In it, they provide the following advice in preparing to apply to the ITC:
Identify which dutiable products you import that lack domestic producers such as inputs to manufacturing or processing that occurs in the United States or finished products unavailable in the domestic market, coordinating internally with sourcing teams to identify potential domestic industry opposition;
Tailor product descriptions and technical specifications as narrowly as possible to target specific items and increase the likelihood of success, as well as to distinguish products from competitors; and also work to ensure the products are tied to supplier invoices for validation and implementation by U.S. Customs and Border Protection at the time of importation;
Analyze import figures and duty liability to ensure that estimated revenue loss for each product will not exceed $500,000 in a calendar year, or structure a duty reduction consistent with that threshold; and
Identify which members of Congress may be likely to back your proposal and be prepared to request that they provide support through the public comment process.
If you think you might be able to qualify for MTB, we’ve got you covered:
To get all the information you need to provide when applying for the tax break, click here to go to the International Trade Commission’s PDF MTB Process: Information for Petitions.