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Recent Court Decision Impacts Importers and Exporters
Issue 244, February 1, 2000
No Interest on the Harbor Maintenance Tax Refunds
In International Business Machine Corp. v. United States, the U.S. Court of Appeals for the Federal Circuit held that claimants in the Harbor Maintenance Tax export case are not entitled to interest on their awards. Previously, the U.S. Supreme Court had ruled that the HMT, as applied to exports, was unconstitutional, forcing the United States to refund to claimants a reported $732 million dollars. In reaching its decision, the Federal Circuit determined that the awards were not subject to the interest provision covering the overpayment of taxes because for administration and enforcement purposes, Congress deemed the HMT a Customs duty. Unfortunately for the claimants, the Court held that the Customs interest provision did not cover the refunds because of the procedural mechanism by which the claims had been filed. Under the principle of sovereign immunity, the United States does not have to pay interest unless it has specifically waived its immunity by statute, and in enacting the Customs interest provision, Congress limited the scope of its application. The Federal Circuit determined that the statutory waiver did not encompass HMT refund claims because they were filed under a residual jurisdiction provision specifically not covered by the interest provision.
What does this mean for the claimants? Assuming that interest had been awarded on the HMT refunds simply from the date the original judgment was entered, claimants could have collected approximately an additional $270 million. Some options still exist for the claimants. They could petition the Federal Circuit for a rehearing before all the judges of that court in a proceeding known as rehearing en banc, and/or seek review before the United States Supreme Court. Success via either option is a long shot, but those affected by this matter should contact their legal representative.
Our contributing writer, F.D. "Rick" Van Arnam, is a Partner at the Customs and international trade law firm of Barnes, Richardson & Colburn in New York, and can be reached via email or at (212) 725-0200.
Please note that due to the complex nature of the subject matter, AEI cannot be responsible for actions taken by the reader in reliance on the information contained herein without prior consultation with AEI.
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