Your Tariff Refund Arrived. Is It Really Yours to Keep?

More than $100 billion in IEEPA tariff refunds had been paid or were pending through August, according to PwC’s Q3 2026 Closing Statements.

For importers receiving some of that money, another question remains before treating the refund as available cash: Who actually paid the tariff cost?

The government refund generally goes to the importer of record. That does not necessarily settle what happens next if the tariff was charged to customers. Contracts, pricing practices, and customer communications may all come into play.

Phase 3 is now open

The refund process followed the U.S. Supreme Court’s February 20 decision in Learning Resources, Inc. v. Trump, which found that the International Emergency Economic Powers Act did not authorize the president to impose the tariffs at issue. Read the Supreme Court opinion.

U.S. Customs and Border Protection (CBP) has been processing eligible refunds through CAPE, its Consolidated Administration and Processing of Entries program. CBP maintains current IEEPA refund information here.

Phase 3 opened October 6 for certain finally liquidated entries, meaning entries liquidated more than 80 days earlier. CBP’s position is that it cannot refund those entries without a U.S. Court of International Trade order directing reliquidation, according to Buchanan Ingersoll & Rooney’s review of the agency’s court filing.

Importers without such an order remain outside Phase 3 for now. Whether the trade court can extend relief to importers that did not sue is still being argued in court.

When customers paid the tariff

On September 2, the AICPA issued Technical Questions and Answers 7700.01 through 7700.05. The nonauthoritative guidance addresses accounting for mandated IEEPA refunds, including situations involving customer contracts.

Because U.S. GAAP does not contain specific guidance for these refunds, companies may need to establish and consistently apply an accounting policy for recognition. Under a loss recovery approach, companies generally recognize an anticipated refund when recovery is probable, and the amount can be reasonably estimated. Under a gain contingency approach, recognition generally occurs when the refund is realized or realizable.
The customer side deserves its own review.

Deloitte’s public accounting guidance says companies whose contracts allowed them to pass tariff costs through may need to determine whether they now owe customers. The written agreement is part of that review. Past practices, public statements and implied promises can matter as well. Depending on the facts, a company may need to record what it owes customers before recording its own government refund, or at the same time.

Panic, maker of the Playdate handheld gaming device, had a fairly clear situation. The company initially absorbed tariff costs and later began showing the tariff as a separate charge at checkout. When government refunds arrived, Panic returned the tariff amounts to affected customers. Cofounder Cabel Sasser told Game Developer, “It’s just not our money to keep.”

That was one company’s decision based on its own facts. It does not mean every company owes its customers a refund.

Other companies may have a much harder trail to follow. Tariff costs may have been included in a broader price increase, listed separately on an invoice, addressed in a contract provision, or handled differently among customers.

Pending litigation adds another consideration. Holland & Knight reported in August that nearly 100 proposed consumer class actions involving IEEPA tariff charges had been filed across almost 30 federal districts. The firm advises companies considering refunds, credits, or other customer accommodations to consult litigation counsel before making a public announcement.

Start with the original transaction.

How the tariff was recorded matters too. The cost may still be included in inventory, already moved through cost of sales, expensed directly, or included in the cost of another asset.

The refund generally follows the original cost. If the tariff is still sitting in inventory on hand, the refund reduces the inventory’s carrying amount. If the goods have been sold and the tariff runs through cost of sales, the refund reduces cost of sales.
Companies that issue financial statements may also need to consider disclosures. Deloitte’s guidance points to risks and uncertainties, customer refund obligations and subsequent events as areas to review.

For businesses receiving or expecting a material refund, the useful records are fairly basic: customs entries, accounting records, customer contracts, invoices, surcharge language and any communication explaining how tariff costs were handled.

If a tariff refund has arrived or is on the way, your Wilke advisor can help you work through the accounting treatment and coordinate with your legal and customs advisors where needed. Tax consequences may also need to be evaluated based on your facts. Contact us today.