What interest rate does CBP pay?

The IRS underpayment rate under 26 USC 6621 — currently 7% APR, adjusted quarterly. Runs from the date the duty was paid to the date the refund is issued.

Is the interest taxable?

Yes. CBP issues a 1099-INT for refund interest. Report it as ordinary interest income in the year received, separate from the principal refund.

Does interest accrue during CBP review?

Yes — interest accrues from the original payment date through the refund check date. Longer adjudication = more interest, but do not game this; the principal is worth far more than the interest spread.

Is there interest on drawback refunds?

Generally no — drawback is a recovery of duties paid voluntarily, not a refund of erroneous collection. IEEPA is different because the duties were collected unconstitutionally, triggering the interest statute.

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● QUICK ANSWER

Does CBP pay interest on tariff refunds?

Tariff Refund Credits·Updated 2026-04-22·~2 min read

● Quick answer

Yes. CBP pays interest on refunds of excess duty under 19 USC 1505(c) at the IRS underpayment rate established under 26 USC 6621. Interest runs from the date of deposit (duty payment) to the date of refund. The rate updates quarterly. For 2026 first and second quarters, the rate is approximately 8 percent compounded daily.

The statutory basis

19 USC 1505(c) provides that interest accrues on any excess duty paid, from the date of deposit to the date the refund is made. The rate is the same as the IRS underpayment rate under 26 USC 6621 — tied to the federal short-term rate plus 3 percentage points.

This applies to:

Refunds after CF-19 protest approval
Refunds from reliquidation
Refunds from statutory changes (like CAPE IEEPA)
Refunds from Post-Summary Correction

Interest is not paid on MPF or HMF refunds, which are user fees, not duty.

Current interest rates

IRS publishes the underpayment rate quarterly. Approximate recent rates:

Q1 2026 — 8 percent
Q4 2025 — 8 percent
Q3 2025 — 8 percent
Q2 2025 — 8 percent
Q1 2025 — 8 percent

Daily compounding under 26 USC 6622 means a duty deposit held for one year earns roughly 8.3 percent effective yield. Over 18 to 24 months — common for CAPE cases where the IEEPA duty was paid in 2025 and refunded in 2026 or 2027 — compounded interest is material.

Interest calculation example

Example: $500,000 IEEPA duty paid June 15, 2025. CAPE refunds September 15, 2026 (15 months later).

Principal: $500,000
Annual rate: 8 percent (approximate, variable by quarter)
Daily rate: ~0.0219 percent
Days held: 457
Interest accrued: ~$50,000
Total refund: ~$550,000

Actual math uses the specific quarterly rate each day. Your broker or CBP produces the official interest calculation at refund.

When interest starts and stops

Start — Date of deposit. For normal consumption entries, this is the date duty was paid to CBP, typically at entry or via periodic monthly statement payment.

Stop — Date of refund disbursement (when the Treasury ACH clears to your account).

The CF-19 protest process, CAPE processing delay, and CBP review time all accrue interest. This is one reason CBP has a financial incentive to process refunds promptly — the interest meter is running against Treasury.

Does interest apply to CAPE refunds?

Yes. CAPE is processing refunds under 19 USC 1514/1515 authority (with IEEPA-specific statutory refund mechanism). Interest under 19 USC 1505(c) applies. Importers should receive both principal (refunded duty) and accrued interest on CAPE disbursements.

Verify on your ACH: the total should exceed the original IEEPA duty by the interest amount. If CBP disburses only principal, request interest calculation from your broker.

Taxability of refund interest

The refunded duty itself is generally not taxable income — it's a return of capital (duty previously paid was likely capitalized into COGS). The interest portion is taxable ordinary income under IRC Section 61. Consult your tax advisor on:

Proper treatment of the interest as miscellaneous income
Whether the original duty deduction/capitalization needs to be adjusted on amended returns
State tax implications

Your CPA should handle this as part of the refund processing workflow. Large refunds can materially impact the year's tax position.

Interest on drawback

Drawback under 19 USC 1313 generally does NOT pay interest. Drawback is a trade incentive refund, not an excess-duty refund under 1505. The policy rationale: drawback is earned by export activity, not by prior overpayment.

This is a key distinction from CAPE and CF-19 refunds. See drawback vs refund.

Interest on denied protests

If you file a CF-19 protest and CBP denies it, no interest accrues because no refund is owed. If you appeal to the Court of International Trade under 28 USC 1581 and win, interest flows back to the date of deposit as if CBP had approved initially.

Banking and ACH timing

Once CBP approves the refund including interest, Treasury's Payment Management System issues the ACH. Typical timing:

CBP approval to Treasury PMS queue: 1 to 3 business days
Treasury PMS to originating ACH: 1 to 2 business days
Originating ACH to your bank: 1 to 2 business days
Total: 3 to 7 business days after approval

Confirm the bank details on your CBP Form 5106 are current before filing.

What if CBP underpays interest?

If the interest amount on your refund looks wrong:

Request the detailed interest calculation from CBP via your broker
Verify the deposit date, refund date, and quarterly rates applied
File a follow-up inquiry through ACE if calculation is incorrect
Escalate to CBP Revenue Division for significant discrepancies

Interest miscalculations are uncommon but possible, especially on entries that straddle multiple rate quarters.

Calculate your tariff refund → /calculators/ieepa-refund

How long does the refund take? 60 to 90 days for CAPE. See how long tariff refund takes.

Does drawback pay interest? Generally no. See drawback vs refund.

What's the current IRS rate? Check IRS Rev. Rul. quarterly publications for the exact rate.

Not legal advice. Customs business performed by licensed customs broker partners under 19 CFR 111.

Not legal advice. Customs business performed by licensed customs broker partners under 19 CFR 111. Refund amounts are estimates only and subject to CBP adjudication.