IEEPA Tariff Refund Interest: How Much Extra You're Owed Under 19 USC 1505

When most importers think about their IEEPA tariff refund, they think about the duties they paid. That’s the principal — the IEEPA surcharge that was unconstitutionally collected between February 4, 2025, and February 24, 2026. But there’s another component that many importers overlook entirely: statutory interest.

Under 19 U.S.C. Section 1505(c), CBP is required to pay interest on refunds of overpaid duties. That interest accrues from the date you deposited the duties to the date CBP issues the refund. For IEEPA tariffs — where duties have been held for a year or more and refund processing may take another 12-36 months — the interest component can add 10-15% or more to your total recovery.

This isn’t a bonus. It’s money the government owes you by statute. And understanding how it works changes the math on every decision you make about your refund — including whether to wait for the full government payout or pursue immediate capital.

How 19 USC 1505(c) Works

The statute is straightforward. When CBP collects duties that are subsequently refunded — whether through reliquidation, protest, or court order — interest accrues on the overpayment from the date of deposit to the date of refund.

Key provisions:

• Interest begins accruing on the date you (or your broker, on your behalf) deposited the IEEPA duties with CBP
• Interest stops accruing on the date CBP authorizes the refund payment
• The rate is set quarterly by the IRS under 26 U.S.C. Section 6621, based on the federal short-term rate plus 2 percentage points (for overpayments to non-corporate taxpayers) or plus 0.5 percentage points (for corporate overpayments exceeding $10,000)
• Interest compounds daily — it’s not simple interest

The corporate vs. non-corporate distinction matters. Most importers filing IEEPA claims are corporations (including LLCs taxed as corporations and S-corps), so the lower corporate overpayment rate applies to amounts exceeding $10,000. For the first $10,000 of any overpayment, the higher non-corporate rate applies regardless of entity type.

Recent quarterly rates:

These rates change quarterly based on federal short-term rate movements. The IRS publishes the rate in a revenue ruling approximately one month before each quarter begins. For planning purposes, assume a rate in the 5.5-7% range for corporate overpayments.

Calculating Your Interest: A Worked Example

Let’s walk through a concrete example. Suppose your company imported goods from China in June 2025 and paid $200,000 in IEEPA duties. Your broker deposited those duties on June 15, 2025.

Scenario A: Government refund in January 2027 (19 months after deposit)

Using the corporate overpayment rate (averaging 5.75% over the period):

• Principal: $200,000
• Accrual period: June 15, 2025 to January 15, 2027 = approximately 580 days
• Daily rate: 5.75% / 365 = 0.01575% per day
• Interest (compounded daily): approximately $18,700
• Total recovery: approximately $218,700

The interest adds 9.35% to your principal recovery.

Scenario B: Government refund in June 2028 (36 months after deposit)

Same principal, but now CAPE processing pushes the refund out three years:

• Principal: $200,000
• Accrual period: June 15, 2025 to June 15, 2028 = approximately 1,095 days
• Interest (compounded daily at average 5.75%): approximately $37,400
• Total recovery: approximately $237,400

The interest adds 18.7% to your principal recovery.

The paradox: The longer the government takes to process your refund, the more interest you earn. This creates an odd incentive — delay means more interest. But for most companies, this is a bad trade. The statutory interest rate is almost always lower than your company’s cost of capital.

Why Statutory Interest Usually Isn’t Enough

Here’s where the CFO math gets important. The statutory rate for corporate overpayments has averaged around 5.5-6.5% over the past two years. Compare that to:

• Average corporate WACC: 8-12%
• Small/mid-market borrowing costs: 7-10%+
• Opportunity cost of deployed capital: Company-specific, but often 12-20%+ for growth-stage importers

If your company’s cost of capital is 10% and the statutory rate is 5.5%, you’re losing 4.5% per year in net opportunity cost for every year CBP holds your money. On a $500,000 refund, that’s $22,500 per year — even after accounting for the interest CBP will eventually pay you.

This is exactly why the cost of waiting analysis is so important. The statutory interest partially compensates you for the delay, but it doesn’t make you whole. The gap between statutory interest and your cost of capital is real economic loss.

The CFO guide to IEEPA tariff recovery provides a detailed framework for running this calculation against your company’s specific financial metrics. If you’re a CFO evaluating whether to wait 24 months for a full government refund plus interest vs. taking immediate capital at a discount, the answer depends entirely on your WACC.

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How Interest Interacts with Each Recovery Path

The interest calculation works differently depending on which recovery path you use:

Post-Summary Correction (PSC)

For PSC-eligible entries, the accrual period is relatively short — duties were deposited, the entry hasn’t liquidated yet, and the PSC triggers a refund within weeks to months. Interest accrues from deposit date to refund date, but since PSCs process quickly, the interest component is modest.

Example: $100,000 in duties deposited August 2025, PSC refund issued May 2026 = approximately 9 months of interest = approximately $4,200 at 5.5%.

Formal Protest

Protest-path refunds take longer, so interest accumulates more substantially. Duties deposited in early-to-mid 2025 may not be refunded until 2027 or 2028 through the protest process. Two to three years of interest at 5.5% adds 11-18% to your principal.

Important nuance: The 180-day protest window determines whether you can file a protest at all, but it has no impact on the interest calculation. Interest accrues from the deposit date regardless of when you filed the protest.

CIT Litigation

The longest government path generates the most statutory interest — but also the most opportunity cost. A CIT case that resolves in 36 months means 36+ months of interest accrual from the original deposit date. On paper, the interest looks substantial. In practice, the net economic impact is negative for most companies because the statutory rate trails their cost of capital.

Immediate Capital (Claim Assignment)

When you assign your claim for immediate payment, the buyer acquires the right to the full government refund including statutory interest. The offer price you receive factors in the expected interest — the buyer is essentially purchasing a future cash flow that includes both principal and accrued interest.

This means you’re not “giving up” interest when you take immediate capital. The interest is baked into the valuation. What you’re giving up is the spread between the discounted immediate payment and the eventual full payout (principal plus interest). The government filing vs. immediate capital comparison walks through this calculation.

The Entry-Level Interest Calculation

Interest doesn’t accrue on your total claim as a lump sum — it accrues entry by entry, based on each entry’s individual deposit date. This matters because your entries likely have different deposit dates spread across months.

Example portfolio:

In this example, statutory interest adds 8.9% to the total recovery. Earlier entries accrue more interest because they’ve been held longer. This is another reason why an entry-level analysis matters — you need to know the deposit date and expected refund timeline for each entry to accurately estimate your total recovery.

What Happens If CBP Underpays Interest

CBP calculates interest as part of the refund, but errors happen. The most common issues:

Wrong rate applied. CBP may apply the non-corporate rate to a corporate taxpayer (which actually overpays you — don’t complain about this one) or the corporate rate to a sole proprietor/partnership (which underpays you).

Wrong accrual period. If CBP uses the entry filing date instead of the duty deposit date, or uses the reliquidation date instead of the actual refund authorization date, the interest calculation will be off.

Missing compounding. The statute requires daily compounding. If CBP calculates simple interest instead, the difference on large claims held for multiple years can be significant.

What to do: When you receive your refund, verify the interest component against your own calculation. Your broker should be able to pull the exact deposit dates from ACE for each entry. If the interest paid is materially less than your calculation, you can request a review or file a supplemental claim. The steps to file include verification as a final step.

Interest on Partial Refunds and Batch Payments

CBP may process your entries in batches rather than as a single lump sum. When this happens, each batch payment includes interest calculated through the date of that specific payment — not through some future date when your entire claim is resolved.

This means your earliest-processed entries may carry less total interest than later-processed ones, even if the deposit dates were similar. The determining factor is when each entry clears the queue.

Example: You have two entries, both deposited in May 2025. Entry A clears the CAPE queue and is refunded in October 2026 (17 months of interest). Entry B doesn’t clear until April 2027 (23 months of interest). Entry B earns approximately 35% more interest than Entry A, purely because of queue position.

This dynamic reinforces why early filing and queue position matter. Earlier queue position means earlier refund, which means less interest — but also less waiting. For most companies, the faster recovery is worth more than the incremental interest.

Tracking partial payments: When you receive a batch payment, verify which entries it covers and confirm the interest calculation for each one. Your broker’s ACE reports should show which entries have been reliquidated and which are still pending. Maintain a running reconciliation so you know exactly where your claim stands at any point.

Tax Treatment of Statutory Interest

This is an area where you need your tax advisor involved, but here’s the general framework:

The principal refund — the IEEPA duties returned — is generally not taxable income. You deducted those duties as a cost of goods sold or business expense when you paid them. The refund reverses that deduction. The net tax impact depends on the timing and how you accounted for the tariffs originally.

The statutory interest is taxable income. It’s treated as interest income for federal tax purposes, reportable in the year received. CBP may issue a 1099-INT for the interest portion.

State tax treatment varies by jurisdiction. Some states follow the federal treatment; others have their own rules for government refund interest.

Planning implication: If you’re choosing between receiving a government refund in 2027 vs. 2028, the tax year in which the interest income hits may matter for your tax planning. Discuss with your CPA or tax counsel before making timing decisions.

Frequently Misunderstood Aspects of Statutory Interest

Several misconceptions about 19 USC 1505(c) interest circulate among importers and even some advisors. Clearing these up helps you plan more accurately.

Misconception: Interest starts when the Supreme Court ruled. Wrong. Interest accrues from the date of duty deposit — not from the February 20, 2026, Supreme Court ruling, not from the CIT’s March 4 order, and not from the date you filed your claim. For IEEPA duties deposited in early 2025, interest has been accruing for over a year already.

Misconception: You have to request interest separately. Not typically. CBP is required by statute to include interest in refund payments. You don’t file a separate interest claim. However, verifying that CBP’s interest calculation is correct is your responsibility — and given the volume of claims, errors are likely.

Misconception: Interest stops when you file your claim. No. Interest continues accruing until CBP authorizes the refund. Filing earlier doesn’t reduce your interest — it accelerates when you receive the refund (and the interest). This is another reason early filing is advantageous: you get both the principal and the accrued interest sooner.

Misconception: Interest makes waiting worthwhile. This is the most dangerous misconception. Yes, longer waits produce more statutory interest. But unless the statutory rate exceeds your company’s cost of capital (which it almost never does for established businesses), the net effect of waiting is negative. You earn 5.5% from CBP while your business needs that capital earning 10%+. The spread is real loss.

Misconception: Interest is the same for all importers. The corporate overpayment rate (for amounts exceeding $10,000) is lower than the non-corporate rate. Sole proprietors and partnerships may receive a higher interest rate on their refunds than C-corporations. Know which rate applies to your entity type.

Using Interest Data in Your Recovery Decision

The interest component changes the math on several key decisions:

Government filing vs. immediate capital. When comparing a government refund to an immediate capital offer, you need to compare the discounted immediate payment against the full expected government payout — which includes statutory interest. An offer of 85 cents on the dollar of principal may actually be 78 cents when you factor in the interest you’d receive by waiting. The government filing vs. immediate capital framework walks through this analysis.

Path selection. A PSC that produces a refund in 3 months generates modest interest. A protest that takes 18 months generates substantially more. If you’re choosing between filing a PSC now or waiting for a potentially larger recovery through another path, the interest differential is part of the calculation.

Portfolio splitting. For importers with entries across multiple paths, interest accrual rates can inform which entries to assign for immediate capital and which to hold for government processing. Entries with older deposit dates have more accrued interest — making them more valuable to hold if the government path is expected to resolve relatively quickly.

The Bottom Line on Interest

Statutory interest under 19 USC 1505(c) is a meaningful component of your IEEPA tariff recovery — potentially adding $35,000-$75,000 on a $400,000 claim depending on processing timelines. Don’t ignore it in your financial planning.

But don’t let interest lull you into thinking that waiting is free. The statutory rate almost always trails your company’s actual cost of capital. Every month of delay costs you the spread between what CBP pays in interest and what that capital would earn deployed in your business.

The right approach: calculate your total expected recovery including interest, compare it against the time value of that money in your business, and make an informed decision about which entries to file through the government process and which to convert to immediate capital.

An Impact Assessment gives you the entry-level data you need to run these numbers accurately — including deposit dates, expected timelines, and interest projections for every qualifying entry in your portfolio.