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 capability inside CBP's existing Automated Commercial Environment (ACE) system. Rather than processing 53 million individual entry-specific refunds through legacy systems, CAPE consolidates and streamlines the 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

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

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 was the main build bottleneck in March. It is now processing millions of entries, while CBP continues to add later-phase support for reconciliation, finally liquidated entries, and protests.

Step 3: Review and Liquidation/Reliquidation

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.

CBP's original build plan highlighted interest calculations and manual review as testing priorities. Current filings show this stage is operating at scale, with additional work focused on later entry categories.

Step 4: Refund Delivery

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

With CAPE processing live and later phases still being added, there are several concrete steps every affected importer should be taking:

Could the Government Still Block Refunds?

Yes, at least at the margins. The government filed a notice of appeal from the April 7 injunction on June 2, 2026, and the Federal Circuit docketed the appeal as No. 2026-1898 on June 3, 2026.

On July 28, 2026, the Federal Circuit dismissed and deconsolidated Appeal No. 2026-1898, with the mandate issued the same day. Each side bears its own costs. The April 7 injunction is no longer under active appellate challenge, and the CAPE refund process continues without pending appellate disruption.

The practical risks now are more operational than binary: failed file validations, failed entry-level validations, missing ACH information, entries with reconciliation or protest complications, and unresolved Phase 3/protest-access questions.

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

Update (July 13, 2026): CBP's ECF 45 filing shows processing at scale: 229,609 CAPE declarations submitted, 161,792 passing file validations, 24.4 million entries accepted for IEEPA-duty removal, and 16.74 million entries liquidated or reliquidated without IEEPA duties.

CBP reported $121.75 billion in potential and certified refunds accepted for CAPE processing and $86.3 billion completed, certified, and sent to Treasury. The largest avoidable bottleneck remains ACH: 9,837 refunds had not been transmitted to Treasury because required ACH account information was missing.

CBP deployed new CAPE functionality on June 29 for certain entries flagged for reconciliation, provided no Type 09 reconciliation entry had been filed and the entries were unliquidated or within 80 days of liquidation. By July 10, CBP reported 1.97 million reconciliation-flagged entries had been filed and were processing.

Update (July 15-17, 2026): ECF 46 announces Freestyle World as the next CAPE vehicle and says the court plans future procedure orders for certain finally liquidated entries across roughly 3,700 assigned IEEPA cases. Phase 3 development remains ongoing, and open-protest functionality is still being evaluated. Euro-Notions voluntarily dismissed on July 16. ECF 49 then denied leave to file the broader tariffed-payor amici brief on July 17 without reaching the merits. A separate postal-stream issue raised by Zonos remains unresolved because those duties were remitted through aggregated mail worksheets rather than standard entry summaries. The next CAPE report is due August 4, followed by a closed conference on August 5.

Update (July 17-20, 2026): ECF 52 issued the first Phase 3 procedure order. It directs CBP to reliquidate litigating plaintiffs' entries that have been liquidated for more than 80 days, but only after plaintiffs' counsel submits importer-of-record IDs and CBP accepts the related CAPE declarations. The order keeps the action stayed otherwise and expressly does not decide de minimis issues. Separately, the court directed Zonos to refile its postal-stream motion in Freestyle World after Euro-Notions was dismissed. Importers should not read this case-linked procedure as a general public opening of Phase 3.

Update (July 28, 2026): The Federal Circuit dismissed and deconsolidated Appeal No. 2026-1898, with the mandate issued the same day. Each side bears its own costs. The April 7 injunction is no longer under active appellate challenge, which removes the main binary litigation risk from the refund timeline. The CAPE process continues on schedule with the next report due August 4 and a closed conference August 5.

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