Can 'Section 1313 Duty Drawbacks' Provide the Cash Flow to Settle Corporate Tax Debt?

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 It can be a zero-sum game in a high-pressure corporate finance environment in 2026 when a large IRS tax debt needs to be managed. Corporate officers will have to resort to found money in their respective supply chains when shoestring credit lines are stretched to the limit. The federal arsenal has 19 U.S.C. SS 1313, often referred to as the Duty Drawback program, which is one of the most neglected secret weapons.

Through the recovery of up to 99 percent of duties and taxes charged on imported goods that are further exported, the companies can create liquidity of immediate importance in meeting immediate tax obligations without liquidation of core assets.

Tax Debt


How does a "Drawback" transform into immediate cash for the IRS?

The United States Customs and Border Protection (CBP) and the IRS are part of the same department of the Treasury. Although they are used in different respects, the cash created as a duty drawback is fungible. The use of an IRS tax lawyer from Los Angeles or other places can help with the drawback.

In the event that your corporation files and wins a drawback claim under Section 1313, the CBP will refund the duties, taxes, and fees, including Merchandise Processing Fees (MPF) and Harbor Maintenance Taxes (HMT), which were paid at the time of entry.

This infusion of cash is a liquidity bridge. Rather than withdrawing operating capital in order to repay an outstanding corporate tax or installment accord, you can use the found funds, redeeming them to the IRS. Then in 2026, Accelerated Payment Privilege accelerates this process by placing money in your hands in the shortest time possible; of only 90 days.

What are the "Three Pillars" of Section 1313 eligibility?

In order to take advantage of a drawback in the form of a tax-settlement device, there are only three main categories of businesses that the statute identifies:

Unused Merchandise Drawback (1313(j)): You imported merchandise that was not utilized in the U.S. and then sold or destroyed within five years.

Manufacturing Drawback (1313(a) and (b): You imported interested in components ( such as semiconductors or steel ) and used the components in the manufacture of a finished product in the U.S., and then exported the finished product.

Displacement Disadvantage: The most versatile "secret weapon." In 2026, the IRS and CBP permit you to replace the domestic merchandise with foreign merchandise of the same kind and quality and claim the refund due, even when your units of importation were not exported.

Can the IRS "offset" your drawback refund to pay your debt automatically?

Yes. This is one of the key tax cases that a corporate taxpayer should comprehend. With the Treasury Offset Program (TOP), the federal government is allowed to take over all refunds that are owed to you by one agency (CBP) to pay a debt owed to another (IRS).

Conclusion

Duty-Drawback Section 1313 Duty Drawbacks are not just a popular customs money-back; it is a cash-flow powerhouse. Twelve years down the line, when your company is failing to meet a tax bill, check your exports. The best tax attorney from Los Angeles or other places can work towards removing the debt.

When you are bringing in goods to use and selling finished products (or things you can substitute), the federal government might already have the cash you need to pay off your IRS debt. You can emerge out of debt under the recovery rules of the government by matching your refunds in CBP against the obligations of the government at the IRS.
Location: Los Angeles, CA, USA

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