CUSTOMS LITIGATION | 2026-10-06

When CBP Keeps Part of Your IEEPA Refund: Offsets Under 19 CFR 24.72, the Treasury Offset Program, and How California Importers Can Challenge a Short Payment

An approved IEEPA refund is not always the amount that reaches the importer's bank account. Customs and Treasury can divert part of it to pay other debts. Knowing which debts qualify, what notice the law requires, and how to contest an offset can be worth a meaningful share of the recovery.

Importers that have spent months assembling entry data, filing CAPE declarations, protesting liquidations, or joining Court of International Trade litigation reasonably expect the refund they are owed to arrive in full. Sometimes it does not. U.S. Customs and Border Protection has stated that IEEPA

The Supreme Court's February 20, 2026 decision in Learning Resources, Inc. v. Trump held that the International Emergency Economic Powers Act does not authorize the President to impose tariffs. That holding created one of the largest refund obligations in the history of U.S. Customs and Border Protection, and the agency built a dedicated process — CAPE, the Consolidated Administration and Processing of Entries — to pay it. Most of the public discussion since then has focused on eligibility: which entries qualify, which phase of CAPE covers them, and what deadlines apply. Far less attention has gone to what happens at the very end of the process, when the refund is calculated, certified, and paid. That final step is where offsets occur.

An offset is simple in concept. When the government owes money to someone who also owes money to the government, it can apply one obligation against the other and pay only the difference. For an importer with a clean account, offsets never come into play. For an importer with an open CBP bill, a pending penalty, a disputed liquidation, or a debt referred by another federal agency, an offset can reduce — or in some cases consume — the IEEPA refund. The law places real limits on when that can happen. Knowing those limits is the difference between accepting a short payment and recovering the full amount.

The Three Ways an IEEPA Refund Can Be Reduced Before It Is Paid

It helps to separate three distinct mechanisms, because each rests on different legal authority and each is challenged in a different way.

1. Netting within the entry

CBP has stated that refunds processed through CAPE are subject to the netting of all overpayments and underpayments for the entire entry. In practical terms, CBP does not simply strip the IEEPA duty line from an entry and refund it in isolation. It recomputes the entry as a whole. If the same entry carries an underpayment on another line — for example, a classification error, an undervalued line, or a Section 232 or Section 301 duty that was not fully deposited — the recomputation reduces the net refund. Netting is not technically a collection of a separate debt; it is part of determining the correct amount owed on the entry. But from the importer's perspective the result is the same: less money than the IEEPA duty line alone would suggest.

2. CBP set-off under 19 CFR 24.72

The second mechanism is CBP's own set-off regulation. 19 CFR 24.72, titled "Claims; set-off," provides in substance that when an importer of record or other party holds a judgment or other claim allowed by legal authority against the United States, and is indebted to the United States as principal or surety for an amount that is legally fixed and undisputed, the port director is to set off enough of the claim to equal the debt. CBP's public guidance on IEEPA refunds expressly references this regulation, stating that refunds are subject to potential diversion as necessary and appropriate to offset an importer's legally fixed and undisputed unpaid debts to the United States, if any.

The phrase "legally fixed and undisputed" is the heart of the regulation. A debt that is fixed is one whose amount has been finally determined. A debt that is undisputed is one the importer has not contested through an available process. A bill for supplemental duties on an entry that is under timely protest, or an assessment the importer is challenging in court, does not obviously fit that description.

3. The Treasury Offset Program

The third mechanism sits outside CBP entirely. The Bureau of the Fiscal Service, part of the Department of the Treasury, operates the Treasury Offset Program, which matches federal payments against a database of delinquent debts that agencies have referred for collection. The governing statute is 31 U.S.C. § 3716 (administrative offset), implemented for centralized offset of federal payments to collect non-tax debts in 31 CFR 285.5. When a payment to a payee matches a referred delinquent debt, Treasury can withhold part or all of the payment and apply it to the debt. Because a customs refund is a federal payment, an importer with a delinquent debt referred by another agency can see its refund reduced this way even though the debt has nothing to do with customs.

What the Law Requires Before the Government Takes an Offset

Offset is a collection remedy, and Congress conditioned it on basic procedural protections. Under 31 U.S.C. § 3716(a), before collecting a claim by administrative offset, the agency must give the debtor:

written notice of the type and amount of the claim, the intention of the agency to collect the claim by administrative offset, and an explanation of the debtor's rights under the section;
an opportunity to inspect and copy the agency's records related to the claim;
an opportunity for a review within the agency of the agency's decision related to the claim; and
an opportunity to make a written agreement with the agency to repay the amount of the claim.

These protections generally attach at the time the creditor agency refers or pursues the debt, which is why a debt properly referred to the Treasury Offset Program has, in theory, already passed through a notice-and-review stage. The practical problem for importers is that the notice may have gone to an outdated address, to a former officer, or to a customs broker that never forwarded it. An importer that first learns of a debt when its IEEPA refund arrives short has a strong reason to ask whether the required notice was ever given.

CBP's set-off regulation operates on its own terms. By its text, 19 CFR 24.72 reaches only debts that are legally fixed and undisputed. That limitation is a substantive constraint on what CBP may take, not merely a procedural formality.

Disputed Debts: Where the Reported Problems Are Arising

In 2026, trade press coverage reported that multiple attorneys said CBP was offsetting IEEPA refunds against debts that were disputed or not yet fixed. Commentary from customs practitioners has raised due process and statutory concerns about offsets taken against amounts still under protest, litigation, or administrative review. Those reports are attorney accounts rather than published agency decisions, and the facts of individual matters vary. But they are consistent with how offsets go wrong in practice, and they identify the categories that importers should check most carefully:

Bills for entries under protest. If an importer has timely protested a liquidation under 19 U.S.C. § 1514, the resulting supplemental duty bill is, by definition, disputed.
Penalty and liquidated damages claims still in mitigation. A claim pending in a petition process under 19 U.S.C. § 1618 or the liquidated damages procedures in 19 CFR Part 172 has not been finally fixed.
Debts in active litigation. Amounts that are the subject of a pending Court of International Trade case are contested.
Surety-side debts. Because 19 CFR 24.72 refers to debts owed "as principal or surety," importers should confirm whether a debt is truly their own obligation or one recorded against a bond in a way that should be pursued against another party.
Debts of a related or predecessor entity. Importer of record numbers, EINs, and corporate histories can be tangled after acquisitions and restructurings. An offset should match the actual debtor.

CBP has also indicated in its IEEPA refund guidance that it paused collection on bills that consist of unpaid IEEPA duties, while non-IEEPA amounts on those bills remain due. That distinction matters: an importer may assume that every open bill on its account is "IEEPA-related" and therefore on hold, while CBP treats the non-IEEPA portion as a live, collectible debt eligible for set-off.

How to Tell Whether Your Refund Was Offset

The first challenge is often simply recognizing that an offset happened. Refunds are now paid electronically; under CBP's Electronic Refunds interim final rule, refunds issued on or after February 6, 2026 are paid by ACH rather than paper check, absent an approved waiver. An ACH deposit that is smaller than expected does not explain itself. Importers should build a reconciliation that ties each payment to its source data.

A practical reconciliation sequence

Start with the expected refund. For each entry, compute the IEEPA duty deposited and the statutory interest owed under 19 U.S.C. § 1505. Our guide to IEEPA refund interest under 19 U.S.C. § 1505 explains how that interest accrues.
Compare against the reliquidation or CAPE result. Identify whether CBP's recomputation of the entry differs from the importer's, and if so, which lines produced the difference. That isolates netting.
Match payments to entries. Use ACE reports and the remittance detail associated with the ACH payment to tie deposits to specific entries and refund amounts.
Identify the residual gap. Whatever remains unexplained after netting is the candidate offset. Determine whether CBP applied it to an open CBP bill or whether Treasury applied it through the Treasury Offset Program.
Request the underlying records. Section 3716(a) gives a debtor the right to inspect and copy records relating to the claim. Ask for the bill numbers, the debt, the referring agency, and the date and manner of any notice.

Our guide to using ACE reports to find IEEPA entries covers the data sources that make this reconciliation possible.

Challenging an Improper Offset

The right challenge depends on which mechanism produced the reduction. There is no single form that fits every case, and the law in this area is less developed than the law governing refund eligibility itself. The following framework reflects the available routes.

Netting disputes

If the reduction came from CBP's recomputation of the entry, the dispute is really about the correctness of the liquidation or reliquidation. Liquidation and reliquidation decisions, and "all charges or exactions of whatever character" within CBP's jurisdiction, are among the decisions that can be protested under 19 U.S.C. § 1514(a). Protests generally must be filed within 180 days after liquidation under § 1514(c)(3). A denied protest can then be taken to the Court of International Trade under 28 U.S.C. § 1581(a). Our explainer on customs protests and tariff refund rights walks through that process.

CBP set-off of a disputed debt

Where CBP has set off a debt the importer contends is disputed or not fixed, the first step is a written objection to the port and CBP's revenue office identifying the debt, explaining why it is not legally fixed and undisputed, and documenting the pending protest, petition, or litigation. Whether a set-off decision is itself protestable under § 1514 has not been squarely resolved in published authority that we have located, so prudent counsel will often preserve every available avenue: a timely protest where an arguably protestable decision exists, a written objection invoking 19 CFR 24.72's limits, and, where administrative routes fail, an action in the Court of International Trade. The Court's residual jurisdiction under 28 U.S.C. § 1581(i) has been the vehicle for much IEEPA litigation, and claims under that provision are subject to the two-year limitations period in 28 U.S.C. § 2636(i).

Treasury Offset Program offsets

When Treasury intercepts a payment through the Treasury Offset Program, the dispute generally belongs with the agency that referred the debt, not with CBP. The Bureau of the Fiscal Service applies the offset based on the referring agency's certification. An importer contesting a TOP offset should identify the referring agency from the offset notice, request the debt records, and pursue that agency's review process. If the debt was referred without the notice and review opportunities 31 U.S.C. § 3716(a) requires, that defect is central to the challenge.

Bankruptcy and insolvency

Importers in financial distress face an additional layer. The Bankruptcy Code preserves certain rights of setoff for mutual pre-petition debts, subject to limits, in 11 U.S.C. § 553, and the automatic stay affects how and when the government may exercise them. An importer considering a restructuring while IEEPA refunds are pending should involve both customs and insolvency counsel before the refund is paid, because the timing of the petition can affect what the government may set off.

Preventing Offsets Before the Refund Is Paid

The most effective offset strategy is preventive. Before a refund is certified, an importer can often clean up its account or document its disputes in a way that reduces the risk of a mistaken diversion.

Run an account-level debt review. Identify every open CBP bill, pending penalty, liquidated damages claim, and bond-related item associated with the importer of record number.
Separate undisputed from disputed items. Pay or resolve undisputed debts on your own terms, including any interest that accrues on CBP bills under 19 CFR 24.3a. Document disputed items in writing so that the record shows they are contested.
Check federal debts outside customs. Confirm whether any federal agency has referred a delinquent debt for the company. A TOP match is easier to address before a large refund is intercepted than after.
Confirm ACH and entity data. Make sure the importer of record's ACH Refund enrollment, legal name, and EIN are current, so payments and any offsets are attributed to the correct entity. Our article on CBP's mandatory electronic refund transition covers the ACH requirement.
Read the CAPE declaration. Practitioner commentary on CBP's CAPE FAQs has noted that filers acknowledge, as part of the declaration process, that refunds may be subject to offset. That acknowledgment does not expand CBP's legal authority beyond 19 CFR 24.72, but it underscores that offsets are an expected part of the process.

An Illustrative Example

The following example is hypothetical and is provided for illustration only.

A Los Angeles consumer-electronics importer expects an IEEPA refund of roughly $2.1 million across 140 entries, plus interest. The ACH deposit it receives is about $1.6 million. Its reconciliation shows that roughly $60,000 of the gap comes from CBP's netting of an underpaid Section 301 line on several entries — a genuine error the company had not caught. The remaining gap traces to a supplemental duty bill on an unrelated 2024 classification dispute that the company has under timely protest. Because that bill is disputed, the importer's counsel objects in writing that the debt is not "legally fixed and undisputed" within 19 CFR 24.72, documents the pending protest, and requests release of the diverted amount, while preserving a Court of International Trade claim if CBP refuses. The netting adjustment stands; the set-off is contested.

The example illustrates why reconciliation matters. Without isolating each component, the importer would have seen only a single unexplained shortfall.

Why Offsets Matter More for IEEPA Refunds Than for Ordinary Refunds

Routine customs refunds tend to be modest, and an offset against a small refund is often not worth contesting. IEEPA refunds are different in scale. They frequently aggregate duties paid on hundreds or thousands of entries over many months, plus interest. A single offset against a disputed bill can divert a sum large enough to matter to a mid-sized importer's working capital. And because IEEPA refunds are being processed in large volumes under time pressure, the risk of a mismatch between CBP's records and the importer's actual dispute status is higher than in ordinary course.

There is also a timing issue. Once money is diverted, recovering it requires the government to reverse a completed payment. That is generally slower and harder than preventing the diversion in the first place. Importers that learn of the offset risk early can often address it before the refund is certified.

Offsets, Lenders, and Refund Purchasers

Offsets also matter to parties other than the importer. Companies that have pledged expected IEEPA refunds as collateral, or that have explored selling refund rights, should recognize that the amount ultimately paid may be reduced by netting and set-off. The federal Anti-Assignment Act, 31 U.S.C. § 3727, already limits how claims against the United States can be transferred before they are allowed and a payment warrant issues; offsets add another layer of uncertainty about the amount. Our analysis of selling or financing IEEPA refund claims discusses those limits.

Frequently Asked Questions

Can CBP keep part of my IEEPA refund to pay another customs bill?

Yes, in some circumstances. CBP's set-off regulation, 19 CFR 24.72, allows it to set off a refund against an importer's debt to the United States, but by its terms only where the debt is legally fixed and undisputed. CBP's IEEPA refund guidance references this regulation.

What is the difference between netting and an offset?

Netting happens inside a single entry: CBP recomputes the entire entry, so underpayments on other lines reduce the IEEPA refund on that entry. An offset applies a refund against a separate debt — an open bill on a different entry, a penalty, or a debt owed to another federal agency.

Can another federal agency take my customs refund?

Potentially. The Treasury Offset Program, run by the Bureau of the Fiscal Service under 31 U.S.C. § 3716 and 31 CFR 285.5, can intercept federal payments to collect delinquent non-tax debts that agencies have referred for collection. A customs refund is a federal payment.

Am I entitled to notice before an offset?

Under 31 U.S.C. § 3716(a), an agency collecting by administrative offset must first give written notice of the claim and the intent to offset, an opportunity to inspect records, an opportunity for agency review, and an opportunity to agree to repay. If you never received notice of the underlying debt, that is a significant issue to raise.

What if the debt CBP offset is under protest?

A debt under timely protest is disputed. Object in writing, citing the "legally fixed and undisputed" limit in 19 CFR 24.72 and documenting the protest, and preserve your options for a Court of International Trade action if CBP does not release the funds.

How do I find out what debt was offset?

Reconcile the ACH payment against your expected refund entry by entry, isolate any unexplained shortfall, and request the records relating to the debt. For Treasury Offset Program offsets, the offset notice identifies the referring agency.

Does signing the CAPE declaration waive my right to challenge an offset?

Acknowledging that refunds may be subject to offset is not the same as agreeing that any particular offset is lawful. The regulation's limits still apply. Have counsel review the specific declaration language and your facts.

Related Customs & Trade Guides

Talk to a Customs Attorney About a Short IEEPA Refund

If your IEEPA refund arrived smaller than expected, or you want to clear your account before a large refund is certified, Trembach Law Firm can reconcile the payment, identify any netting or offset, and contest diversions that the law does not permit. Call (213) 645-2246 for a consultation.

Contact Trembach Law Firm at (818) 514-7680 for a confidential consultation.

Trembach Law Firm | 27001 Agoura Road, Suite 350, Calabasas, CA 91301