How Is Interest Calculated on Your IEEPA Refund?
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TL;DR – Your IEEPA refund includes interest under 19 U.S.C. § 1505. Interest accrues from the date you originally paid the duties using daily compound interest at the IRS quarterly rate — 6% for corporations, 7% for non-corporate entities throughout 2025 and Q1 2026, dropping to 5% / 6% in Q2 2026. You don't need to request it separately. CBP calculates and includes it automatically.
Yes, Your Refund Includes Interest
Under 19 U.S.C. § 1505, CBP is required to pay interest on customs duty refunds. This applies to the IEEPA refunds processed through CAPE – you don't need to add a separate line to your Declaration or make any special request. CBP calculates the interest and includes it in your refund payment automatically.
Interest accrues from the date the duties were originally paid — not from the date of the Supreme Court ruling, not from the date you filed your CAPE Declaration. The clock started the day your money arrived at CBP. Since IEEPA duties were collected starting in February 2025, entries from that period will carry more than a year of interest by the time refunds are processed in mid-to-late 2026.
The Interest Rate
The rate is set by statute under 26 U.S.C. § 6621 and tied to the IRS Federal short-term rate, adjusted quarterly. The formula is fixed:
- Corporations: Federal short-term rate + 2 percentage points
- Non-corporate entities (individuals, partnerships, S-corps, sole proprietors): Federal short-term rate + 3 percentage points
The Federal short-term rate held at 4% throughout 2025 and into early 2026, then edged down. Here are the applicable rates for the full IEEPA period:
| Quarter | Corp | Non-Corp | Source |
|---|---|---|---|
| Q1 2025 (Jan–Mar) | 6% | 7% | Rev. Rul. 2024-25 |
| Q2 2025 (Apr–Jun) | 6% | 7% | Rev. Rul. 2025-7 |
| Q3 2025 (Jul–Sep) | 6% | 7% | Rev. Rul. 2025-14 |
| Q4 2025 (Oct–Dec) | 6% | 7% | Rev. Rul. 2025-18 |
| Q1 2026 (Jan–Mar) | 6% | 7% | Rev. Rul. 2025-22 |
| Q2 2026 (Apr–Jun) | 5% | 6% | Rev. Rul. 2026-7 |
Each quarter's rate applies only to the days that fall within that quarter. An entry paid in March 2025 accrues interest at the Q1 2025 rate for Q1, then Q2 2025 for April through June, and so on through the date CBP issues the refund.
The GATT Rule — Large Corporate Overpayments
If you are a corporation and your total refund per IOR exceeds $10,000, a reduced rate applies to the portion above that threshold under 26 U.S.C. § 6621(a)(1). This is known as the GATT rate.
| Quarter | Standard Corp Rate | GATT Rate (corp overpayment >$10k) |
|---|---|---|
| Q1–Q4 2025 | 6% | 4.5% |
| Q1 2026 | 6% | 4.5% |
| Q2 2026 | 5% | 3.5% |
Non-corporate entities are not subject to the GATT rate regardless of refund size.
In practice: if your total IEEPA overpayment is $50,000, the first $10,000 accrues at the standard corporate rate and the remaining $40,000 accrues at the GATT rate. CBP applies this split automatically — you do not need to track it separately.
How CBP Calculates Interest — Daily Compounding
CBP uses daily compound interest, not simple interest. This follows 26 U.S.C. § 6622 and is confirmed by CBP's own Interest Calculation guidance. The formula CBP applies for each quarterly segment:
Interest = Principal × ((1 + Rate / 365) ^ Days − 1)
When an entry spans multiple quarters, the interest earned in one quarter is added to the principal before calculating the next quarter — each period's base is slightly larger than the raw duty amount.
Worked example:
A corporation paid $10,000 in IEEPA duties in April 2025. Refund processes in July 2026 — approximately 15 months across five quarterly rate periods (all at the standard 6% rate since this refund is under the $10,000 GATT threshold):
| Period | Days | Rate | Interest |
|---|---|---|---|
| Q2 2025 (Apr–Jun) | ~91 | 6% | ~$149 |
| Q3 2025 (Jul–Sep) | ~92 | 6% | ~$152 |
| Q4 2025 (Oct–Dec) | ~92 | 6% | ~$152 |
| Q1 2026 (Jan–Mar) | ~90 | 6% | ~$148 |
| Q2 2026 (Apr–Jul) | ~90 | 5% | ~$123 |
| Total | ~455 days | — | ~$724 |
Total refund: ~$10,724.
For a precise calculation based on your actual ES-003 data, entry dates, and corporate status, upload your ES-003 to the Pre-CAPE Audit tool — it calculates the exact refund and § 1505 interest for each entry using the correct quarterly IRS rates and GATT threshold.
Frequently Asked Questions
Do I need to request interest separately? No. Interest is calculated and paid automatically by CBP under 19 U.S.C. § 1505. Your CAPE Declaration does not include a separate interest request — CBP computes it when processing your refund.
Does CBP use simple or compound interest? Compound interest, compounded daily. This is confirmed by CBP's own Interest Calculation guidance and follows 26 U.S.C. § 6622. The practical difference versus a simple-interest estimate is small (under 0.5% over 15 months at these rates), but the actual refund will be marginally higher.
What if my entries span multiple quarters? Each entry accrues interest from its specific payment date. Entries from February 2025 accrue more interest than entries from December 2025. The rate applied each quarter is the IRS quarterly rate for that period — all four quarters of 2025 were 6% / 7%, Q1 2026 stayed the same, Q2 2026 dropped to 5% / 6%.
What is the GATT rate and does it apply to me? The GATT rate applies only to corporations whose total IEEPA refund per IOR exceeds $10,000. The portion above $10,000 accrues at 4.5% in 2025 and Q1 2026, and 3.5% in Q2 2026. If you are not a corporation — LLC taxed as partnership, sole proprietor, individual — the GATT rate does not apply.
Is the interest taxable income? Yes. Interest received on a customs refund is treated as ordinary income for US federal tax purposes in the year you receive it. The interest portion will likely appear separately from the duty refund on CBP documentation. Consult your accountant — the principal refund may also have tax implications depending on how you deducted those duties in prior years.
When does interest stop accruing? Under normal circumstances, interest accrues until CBP issues the refund — specifically the date CBP processes the reliquidation and generates the payment, not when the money arrives in your bank account. However, there is one critical exception: if CBP certifies your refund but cannot deliver it because you have not set up ACH, interest stops accruing from the moment CBP attempted to send the payment. See below.
What happens to interest if my ACH is not set up? This is the most important thing to know before filing. Under 19 CFR 24.36(a)(3), as amended in the Federal Register (2025-24171), if CBP certifies your refund and initiates an electronic payment but cannot complete the transfer solely because the recipient has not provided valid ACH banking information, interest stops accruing from that date. The refund shows up in the REV-613 ACH Rejected Refunds report — but the interest clock has already stopped.
In practice: you could have a $50,000 refund sitting in REV-613 for three months with zero additional interest accumulating, simply because your bank account was not linked in ACE Portal. Set up ACH before you file your CAPE Declaration — not after.