Mistake 1: Ignoring the Five-Year Window
The most expensive drawback mistake is simply waiting too long to start. Every day that passes, import entries age out of eligibility. Companies that delay drawback evaluation for “when things slow down” often discover years of refunds have already expired.
The solution: evaluate drawback opportunity now. Even if implementation takes months, understanding your potential preserves the ability to act before more claims expire.
Mistake 2: Assuming All Duties Qualify
Not all duties are eligible for drawback. Companies sometimes build programs assuming they can recover antidumping duties, countervailing duties, or Section 232 duties—only to discover these are excluded.
The solution: verify which specific duties you’re paying and confirm drawback eligibility before projecting recovery. Section 301 duties are eligible; Section 232 duties are not. The distinction matters enormously.
Mistake 3: Underestimating Data Requirements
Many companies assume their existing systems can support drawback, only to discover critical data gaps when implementation begins. Missing entry numbers, incomplete HTS classifications, or inadequate export documentation derail programs that looked promising on paper.
The solution: conduct a thorough data assessment before committing to implementation. Request actual sample data, not assurances that data exists. Identify gaps and assess remediation costs realistically.
Mistake 4: Overlooking the “Other-Other” Rule
Substitution drawback depends on HTS matching, but not all HTS codes qualify. Products classified under “Other” provisions at both the 8-digit and 10-digit levels cannot use substitution—only direct identification.
The solution: verify your HTS codes qualify for substitution before building a program around it. If key products fall into “Other-Other” classifications, you’ll need direct identification capabilities.
Mistake 5: Neglecting FTA Limitations
Companies heavily focused on Canadian or Mexican exports sometimes overestimate drawback potential. The “lesser of the two” rule and unavailability of substitution for FTA exports significantly limit recovery on shipments to these destinations.
The solution: analyze export destinations, not just export volumes. A company with modest non-FTA exports may have more drawback opportunity than one shipping primarily to Mexico.
Mistake 6: Poor Partner Selection
Drawback is specialized work. Brokers without dedicated drawback expertise often underestimate complexity, provide poor guidance on program structure, and struggle with claim preparation and filing.
The solution: work with partners who specialize in drawback, can demonstrate relevant experience, and have systems designed for drawback processing—not general-purpose tools adapted for occasional claims.
About TLR Drawback Services
TLR’s drawback team combines decades of specialized experience with modern technology to maximize duty recovery for our clients. From program evaluation through claim filing and payment, we handle the complexity so you can focus on your business. Contact us to explore your drawback opportunity
