CBP's CAPE Refund System: How $166 Billion in IEEPA Tariff Refunds Will Actually Get Paid

Background: From Supreme Court Ruling to Refund Chaos

On February 20, 2026, the U.S. Supreme Court ruled that President Trump lacked authority to impose tariffs under the International Emergency Economic Powers Act (IEEPA). The decision immediately invalidated tariffs that had been collected on imports since the original IEEPA executive orders took effect—creating the largest customs refund obligation in U.S. history.

The case of Atmus Filtration, Inc. v. United States quickly became the vehicle through which the Court of International Trade (CIT) began ordering CBP to process refunds. On March 4, 2026, Judge Richard Eaton issued an order directing CBP to begin paying refunds "immediately." Two days later, on March 6, CBP responded with a declaration stating that its existing procedures and technology were "not suited to a task of this scale"—53 million entries and $166 billion in duties.

Judge Eaton suspended his original order but gave CBP a tight leash: 45 days to build a system, with weekly progress reports to the court. The result of that effort is CAPE. For a full timeline of these events, see our IEEPA Refund Timeline.

What Is the CAPE System?

CAPE—Consolidated Administration and Processing of Entries—is a new capability being built inside CBP's existing Automated Commercial Environment (ACE) system. Rather than processing 53 million individual entry-specific refunds through legacy systems, CAPE is designed to consolidate and streamline the entire refund process on an importer basis.

According to a declaration filed by Brandon Lord, CBP's Executive Director of the Trade Programs Directorate, on March 12, 2026, CAPE consists of four integrated components that work sequentially to move claims from submission through to electronic payment.

The 4-Step CAPE Process, Explained

Step 1: Claim Portal (70% Complete)

The Claim Portal is the front door of the CAPE system. It is a web-based interface within ACE where importers of record and their licensed customs brokers submit IEEPA refund requests by filing a "CAPE Declaration."

The process works like this: filers upload a CSV (Comma-Separated Values) file containing a list of the entry summaries for which they are requesting IEEPA refunds. After the CSV is uploaded, ACE runs two rounds of validation:

• File validations: The system checks that the CSV is properly formatted, contains required fields, and meets structural specifications.
• Entry validations: ACE cross-references each listed entry summary against CBP records to confirm the entries exist, that IEEPA tariffs were actually paid, and that the data is accurate.

If entries fail validation, importers can review the specific issues flagged by the system and resubmit—in some cases via a separate, corrected claim. This is similar in concept to how the ACE protest process handles data validation, but with a dedicated interface optimized for the volume of IEEPA entries.

Step 2: Mass Processing (40% Complete)

Once a CAPE Declaration passes validation, the Mass Processing component takes over. This step automatically removes all applicable IEEPA HTS numbers from the submitted entry summaries, effectively stripping out the tariff charges that were declared unconstitutional.

After the IEEPA HTS numbers are removed, the system runs ACE's standard duty calculation validations—the same checks that already exist in ACE for normal entry summary processing. These validations review all remaining HTS numbers on each entry and confirm that the correct (non-IEEPA) duties owed are calculated properly.

This is the component with the most work remaining. At 40% complete as of March 12, it is currently focused on building the automated entry summary update process—the core engine that modifies millions of entries in bulk.

Step 3: Review and Liquidation/Reliquidation (80% Complete)

After entries clear mass processing, this component initiates the formal liquidation or reliquidation process. Each entry is automatically scheduled to liquidate a specified number of days from the CAPE Declaration acceptance date (CBP has not disclosed the exact number of days).

During this stage, the system:

• Updates underlying entry summaries to reflect the new total duties paid (without IEEPA components).
• Automatically calculates interest owed to the importer on the overpaid amounts.
• Allows CBP manual review as needed through a streamlined process being developed in parallel.

Although this component is 80% complete, CBP noted it requires additional testing—particularly around the interest calculation logic and the manual review workflow for flagged entries.

Step 4: Refund Delivery (60% Complete)

When entries reach their scheduled liquidation or reliquidation date, they flow into CAPE's dedicated refund process. This final component consolidates refunds by liquidation date and by importer of record (or a designated party via CBP Form 4811). The consolidated amount is then electronically transferred to the importer's registered bank account.

This consolidation approach is critical. Instead of processing 53 million individual refund transactions—which would overwhelm both CBP and Treasury systems—CAPE batches them by importer and date, dramatically reducing the number of actual payment transactions while ensuring importers receive their full entitlement plus interest.

The ACH Electronic Refund Requirement: A Critical Bottleneck

Perhaps the most actionable detail in CBP's filings is this: if you have not set up ACH electronic refunds in ACE, your IEEPA refund will be rejected.

Effective February 6, 2026, CBP transitioned to an all-electronic refund system under the Electronic Funds Interim Final Rule (Federal Register Document 2025-24171, published January 2, 2026). Paper checks are no longer issued. Every importer of record must complete the ACH enrollment process in ACE to receive any refund—including IEEPA refunds through CAPE.

The numbers are alarming: as of early March, fewer than 22,000 out of more than 330,000 importers who paid IEEPA tariffs had completed ACH setup. That means over 90% of importers entitled to refunds are not yet able to receive them.

If you haven't enrolled yet, see our step-by-step ACE ACH Setup Guide and do it today. This is not optional—it is a hard requirement.

Court Oversight: Judge Eaton Keeps the Pressure On

Judge Richard Eaton of the CIT has taken an unusually active role in overseeing CBP's refund process. After suspending his March 4 order directing immediate refunds, he established a schedule of weekly status conferences and progress reports to ensure CBP is actually building the system it promised.

On March 12, following a closed conference and review of CBP's second progress declaration, the court extended the stay on the original refund order and directed CBP to file another progress report by 2:00 PM ET on March 19, 2026. This cadence—weekly court-supervised reporting on software development progress—is virtually unprecedented in customs law.

The CIT's continued oversight matters because it provides a judicial backstop. If CBP falls behind on its 45-day commitment, Judge Eaton has already demonstrated willingness to issue direct payment orders. For importers, this means the refund process has both executive branch action and judicial enforcement driving it forward.

What Importers Should Do Right Now

While CAPE is under construction, there are several concrete steps every affected importer should be taking:

Could the Government Still Block Refunds?

Yes—though the window is narrowing. The government retains the right to appeal CIT orders to the Court of Appeals for the Federal Circuit. It could also theoretically seek rehearing at the Supreme Court, though trade law experts consider this extremely unlikely given the decisiveness of the original ruling.

A Federal Circuit appeal could potentially delay refund processing, but it would face an uphill battle given the Supreme Court's clear holding that IEEPA does not authorize tariffs. The more practical concern is timing: even without legal challenges, the sheer scale of 53 million entries means that processing will likely take months after CAPE goes live. Importers with larger portfolios of entries should plan for a phased refund process, not a single lump-sum payment.

CAPE vs. Other Tariff Recovery Methods

CAPE is specifically designed for IEEPA tariff refunds ordered by the courts. It does not replace or affect other customs recovery mechanisms. Importers should understand how CAPE fits alongside existing options:

• CBP Protests (19 USC § 1514): Still the standard mechanism for challenging liquidation decisions. Continue filing protests to preserve your rights. See our protest filing guide.
• Duty Drawback (19 USC § 1313): If you export imported goods or products made from them, drawback can recover up to 99% of duties—including duties beyond IEEPA. See our Duty Drawback Guide.
• Post Summary Corrections: For unliquidated entries, PSCs filed through ACE remain the primary mechanism to correct duty amounts before formal liquidation.

What Happens Next

The next milestone is CBP's third progress report to the CIT, due March 19, 2026. This will provide updated completion percentages for each CAPE component and may include more details about the CSV template specifications and the Claim Portal launch timeline.

Based on CBP's 45-day estimate from March 6, the earliest the CAPE system could be fully operational is approximately mid-to-late April 2026. However, given that Mass Processing—the engine that actually recalculates duties across millions of entries—was only 40% complete as of March 12, meeting that timeline will require significant acceleration.

We'll continue covering every CAPE development as it happens. Bookmark our blog and check your Refund Impact Estimator results to understand what's at stake for your business.

Frequently Asked Questions