If you’re owed an IEEPA tariff refund, the principal amount is only part of what you’re entitled to. Federal law — specifically 19 U.S.C. Section 1505(c) — requires CBP to pay interest on any excess duties deposited with the government. That interest has been accruing since the day you overpaid, and for many importers, it adds a meaningful amount to the total recovery.
This article breaks down exactly how Section 1505(c) works, how interest rates are determined, when the clock starts, and how the calculation differs depending on which recovery path you’re pursuing.
The Statute: What 1505(c) Actually Says
Section 1505(c) of Title 19 — full statute text here — states that interest shall be paid on any excess deposits at a rate determined by the Secretary of the Treasury. The statute applies whenever duties, fees, or interest have been deposited with CBP and are later found to be in excess of the amount legally owed.
In plain English: if CBP collected more than it should have, the government owes you interest on the difference for every day it held your money. This isn’t a special provision created for IEEPA. It’s a standing feature of customs law that applies to any overpayment — and IEEPA refunds are one of the largest overpayment events in CBP history.
The key phrase is “excess deposits.” After the Supreme Court’s February 20 ruling struck down IEEPA tariffs as unconstitutional, every dollar collected under HTS headings 9903.01 and 9903.02 is, by definition, an excess deposit. The legal authority for the collection never existed. That makes the interest calculation straightforward in principle, even if the mechanics take some work.
How This Differs from a Typical Refund
In a normal duty dispute — say, a classification challenge where you argue your product should fall under a lower-rate HTS code — the “excess” is the difference between what you paid and what you should have paid. With IEEPA, the excess is the entire IEEPA surcharge. The underlying MFN duty rate still applies, but the IEEPA add-on was collected without legal authority. So you’re earning interest on 100% of the IEEPA component, not just a fraction of the assessed duties.
For importers who paid rates of 20%, 34%, or even 145% on China-origin goods during peak IEEPA escalation, the interest component alone can be substantial. A $2 million IEEPA overpayment held for 12 months at a 5% annual rate produces $100,000 in statutory interest. That’s real money that many importers overlook when estimating their recovery.
When Interest Begins Accruing
Interest under 1505(c) starts accruing on the date the excess deposit was made — not the date of the court ruling, not the date of the protest filing, and not the date CBP processes the refund. The clock starts the day your money hit CBP’s account.
For most importers, this means interest has been accruing since the original entry summary was filed and duties were paid. If you filed an entry on March 15, 2025, and paid $500,000 in IEEPA duties, interest on that $500,000 has been running since March 15, 2025. As of today, that’s over 12 months of accrual.
The Practical Impact of Timing
This is one of the reasons the IEEPA tariff refund timeline matters so much. Entries filed in early February 2025 have the longest accrual periods. Entries filed in late 2025 or early 2026 have shorter accrual periods. But because IEEPA rates escalated over time — particularly on Chinese goods — later entries often have higher principal amounts even if the interest period is shorter.
Your Impact Assessment should calculate interest on each entry individually, using the specific deposit date and the specific IEEPA amount for that entry. A portfolio-level estimate is useful for planning, but entry-level precision is what matters for actual recovery.
How Interest Rates Are Determined
The interest rate under 1505(c) is set by the Secretary of the Treasury and is published quarterly by the IRS. It’s based on the federal short-term rate, rounded to the nearest full percent, plus a statutory adjustment.
There are two rate categories that matter:
| Category | Rate Basis | Typical Recent Range |
|---|---|---|
| Corporate overpayments | Federal short-term rate + 2% | 5-7% |
| Non-corporate overpayments | Federal short-term rate + 3% | 6-8% |
Most importers are corporations (C-corps, S-corps, LLCs taxed as corporations), so the corporate rate applies. The rate isn’t fixed — it adjusts quarterly based on Treasury’s determination. Over the IEEPA period (February 2025 through early 2026), rates have generally been in the 5-6% range for corporate overpayments.
Compounding
The statutory interest under 1505(c) is calculated as simple interest, not compound interest. This means you earn interest on the principal overpayment only — not on previously accrued interest. While compound interest would obviously produce a larger number, simple interest on the full IEEPA deposit amount still adds up quickly, especially for importers with high-value entries.
Rate Changes During the Accrual Period
Because the rate adjusts quarterly, a single entry’s interest calculation may span multiple rate periods. For example, an entry filed in March 2025 might accrue interest at 5% for Q2 2025, 6% for Q3 2025, 5% for Q4 2025, and 6% for Q1 2026. The calculation applies each quarter’s rate to the days within that quarter.
This is another reason entry-level precision matters. A rough estimate using a single average rate will get you in the ballpark, but the actual CBP calculation will use the exact rate for each period.
Interest Across Different Recovery Paths
How and when you receive interest depends on which recovery path your entries follow. Each path triggers the interest calculation differently.
Post-Summary Correction (PSC)
When a PSC is processed on an unliquidated entry, CBP recalculates the duty assessment and refunds the excess. Interest accrues from the date of the original deposit to the date CBP processes the refund. Because PSCs are typically processed in days to weeks, the interest component is often modest on a per-entry basis — but it’s still owed.
The advantage of the PSC path for interest purposes is speed. The sooner the refund is processed, the sooner you stop being an unsecured creditor of the U.S. government. However, because PSC entries are the most recent (they haven’t liquidated yet), they also have the shortest accrual periods.
Formal Protest Under 19 U.S.C. Section 1514
For entries that have already liquidated and are protested within the 180-day window, interest continues accruing until the protest is resolved and the refund is issued. CBP has up to two years to decide on a protest, and the practical processing timeline is 18-36 months under current workload conditions.
This extended processing time actually increases the total interest you’re owed. An entry that was deposited in April 2025 and isn’t refunded until mid-2028 will have accrued over three years of interest. For a $1 million IEEPA deposit at 5%, that’s $150,000+ in interest alone.
The catch is that you’re waiting years for that money. The interest compensates you for the delay, but it doesn’t solve cash flow problems in the meantime.
CIT Litigation
When the Court of International Trade orders a refund, interest is included in the judgment. The CIT applies the same 1505(c) rate, and interest accrues through the date of the refund payment — not the date of the judgment. Since CIT cases can take 12-24 months or longer, the interest component on CIT recoveries can be significant.
CIT judgments also carry an additional feature: if the government fails to pay within 180 days of the judgment, the interest rate can increase under separate provisions of 28 U.S.C. Section 2644. This is a rare scenario, but it’s worth noting for large-dollar claims where government payment delays are possible.
Immediate Capital Through Claim Assignment
Here’s where it gets interesting. If you assign your claim to an institutional buyer in exchange for immediate capital, the purchase price typically reflects a discount from the full principal-plus-interest value. The buyer is purchasing both the principal refund and the accrued interest — they’re assuming the time value of money and CBP processing risk in exchange for the discount.
For importers weighing this option, the question is whether the interest you’d eventually receive from CBP is worth more than the certainty of capital today. A $2 million claim with $150,000 in projected interest might sell for $1.8 million today — you’re giving up some of the interest component, but you’re eliminating years of waiting and all processing risk.
Get your free Impact Assessment →
Common Questions About 1505(c) Interest
Does interest apply to the CAPE portal refunds?
Yes. The CAPE system is the portal CBP is building to process IEEPA refunds at scale. Refunds issued through CAPE will include statutory interest calculated under 1505(c). The interest accrues from the deposit date to the disbursement date regardless of which processing mechanism CBP uses.
What if CBP partially refunds my entry?
If CBP refunds the IEEPA component but there’s a dispute about a portion of the duty (say, a classification issue on the underlying MFN rate), interest applies to whatever amount is determined to be an excess deposit. The IEEPA component is clear-cut, so interest on that portion shouldn’t be contested.
Can I earn interest if I already filed a protest?
Absolutely. Filing a protest doesn’t stop the interest clock. Interest continues accruing through the date of refund, whether the refund comes from protest resolution, CIT order, or CAPE processing. In fact, the protest preserves your right to the refund and the associated interest.
What about entries from the first week of IEEPA tariffs?
Entries filed during the very first week of IEEPA tariffs (February 4-10, 2025) have the longest accrual period. These entries have been earning interest for over 23 months as of today. They also tend to be the first to liquidate and the first to hit protest window deadlines. If you haven’t filed protective protests on these early entries, do so immediately — you’re protecting both the principal and over 23 months of accrued interest.
Calculating Your Total Recovery: Principal + Interest
Using the article's $1 million example, total recovery rises as the government holds the money longer. The improvement is real, but it scales much more slowly than most importers assume.
To estimate your total IEEPA recovery including interest, you need three data points for each entry:
- IEEPA duty amount deposited (the principal)
- Date of deposit (when duties were paid to CBP)
- Estimated refund date (varies by recovery path)
The formula is straightforward:
Interest = Principal x Applicable Rate x (Days Held / 365)
For a portfolio-level estimate:
| Scenario | Principal | Rate | Days | Interest | Total Recovery |
|---|---|---|---|---|---|
| PSC (quick) | $1,000,000 | 5% | 365 | $50,000 | $1,050,000 |
| Protest (18 mo) | $1,000,000 | 5% | 548 | $75,068 | $1,075,068 |
| Protest (36 mo) | $1,000,000 | 5% | 1,095 | $150,000 | $1,150,000 |
| CIT (24 mo) | $1,000,000 | 5% | 730 | $100,000 | $1,100,000 |
These are simplified estimates using a flat rate. Actual calculations will apply quarterly rate adjustments and entry-specific deposit dates.
Why This Matters for Your Recovery Strategy
Understanding the interest component changes the math on several strategic decisions:
Protest vs. CAPE: If you’re deciding whether to file a protest or wait for the CAPE portal, know that interest accrues either way. But a protest preserves your rights if CAPE encounters delays or if your entries fall outside CAPE’s scope. There’s no penalty for filing a protest while also being in the CAPE queue.
Timing of claim assignment: If you’re considering immediate capital, the longer you wait, the more interest accrues — which increases the claim value. But waiting also introduces risk (processing delays, policy changes, cash flow pressure). The optimal timing depends on your specific financial situation.
Multi-path strategy: Most importers have entries in different statuses — some unliquidated, some liquidated and within the protest window, some approaching deadline. Each entry’s interest calculation is independent. A comprehensive strategy addresses all entries simultaneously rather than waiting for a one-size-fits-all solution.
The complete guide to IEEPA tariff refunds covers how these strategic decisions interconnect across your full portfolio.
Interest on Denied and Reliquidated Entries
One area that creates confusion is how interest works when entries go through multiple processing stages — particularly when a protest is initially denied and then resolved on further review or through CIT litigation.
Continuous Accrual Through Denial
If CBP denies your protest and you subsequently prevail on further review or at the CIT, interest doesn’t stop accruing during the denial period. The clock runs continuously from the original deposit date to the date of the final refund disbursement. A protest denial is a procedural event — it doesn’t pause the interest obligation.
This means that importers who go through a denial and appeal process actually accrue more interest than those whose protests are granted immediately. The longer the government holds your money, the more interest you’re owed. It’s small consolation for the delay, but it’s a legally guaranteed return.
Reliquidation Interest Calculation
When CBP reliquidates an entry (processes it again with the IEEPA duties removed), the refund includes interest calculated from the original deposit date to the reliquidation date. The reliquidation process itself may take several weeks, and interest continues accruing through that period.
For entries processed through the CAPE system, the interest calculation should be automated — CAPE is designed to compute interest as part of the refund disbursement. For entries processed through manual reliquidation (typically the result of individual protests), the interest calculation may require verification. Review your refund notice to ensure the interest amount matches your expectations based on the deposit date and applicable rates.
When to Challenge the Interest Amount
If you receive a refund and the interest amount appears lower than expected, you can challenge it through the same protest mechanism. Common reasons for interest discrepancies include:
- CBP using the wrong start date (using liquidation date instead of deposit date)
- Applying the wrong rate tier (corporate vs. non-corporate)
- Computational errors in multi-quarter calculations
- Failing to account for rate changes across quarters
An Impact Assessment includes a projected interest calculation for each entry, which gives you a benchmark to compare against the actual refund amount.
What to Do Now
Step 1: Pull your ES-003 Entry Summary Details report from ACE. Identify all entries with HTS codes 9903.01.xx and 9903.02.xx.
Step 2: Note the deposit date and IEEPA duty amount for each entry.
Step 3: Determine the liquidation status and, for liquidated entries, whether you’ve filed a protest.
Step 4: Estimate your total exposure including interest using the formula above.
Step 5: Request an Impact Assessment for precise calculations, entry-level deadline mapping, and recovery path recommendations tailored to your portfolio.
The interest component is money you’re already owed. The only question is how quickly and efficiently you collect it.
