Sold the Business? Here Is Where the IEEPA Tariff Refund Actually Belongs

The Problem of Transaction Timing

The IEEPA tariff period ran from February 4, 2025 through February 24, 2026. The CAPE refund portal opened on April 20, 2026. Between those dates, a significant number of businesses changed hands. Some were sold outright as stock deals. Others were acquired through asset purchases. Some were restructured, merged, or carved out of larger entities.

In each of those situations, a business paid tariffs under one ownership structure and is now positioned to receive a refund under a different one. The refund right did not automatically follow the deal. Whether the buyer or the seller is entitled to the economic benefit of the refund, and who has the legal standing to actually file the CAPE claim, are two separate questions that often have different answers, and they interact with complex customs law, contract law, accounting rules, and tax principles in ways that most deal documents from 2025 were not designed to address.

A Deal Point That Did Not Yet Exist

Transaction documents signed in 2025 were almost certainly silent on IEEPA tariff refunds. The Supreme Court ruling that created the refund opportunity came in February 2026, months after many of those deals closed. That silence is now a live dispute for many buyers and sellers, and how it resolves depends on the deal structure, governing law, and how the tariff costs were treated in the target business’s financials.

The Controlling Legal Rule: Importer of Record Status

Under U.S. Customs law, only the Importer of Record is eligible to receive a CAPE tariff refund directly from CBP. The IOR is the party named on CBP Form 7501 at the time of each import — the entity legally responsible for paying duties and ensuring compliance. This is not a procedural nicety; it is the structural predicate for the entire CAPE system, and there is no administrative mechanism for CBP to redirect a refund payment to a different entity that was not the original IOR.

The practical consequence: knowing who gets the refund requires knowing who held IOR status on each relevant entry during the IEEPA period, and then tracing what happened to that entity through the transaction.

Stock Deals: The Entity Stays Intact

In a stock purchase or a merger, the acquiring company acquires the target entity’s equity. The legal entity itself – the corporation or LLC that was the IOR – remains in existence, just under new ownership. Its EIN is unchanged, its ACE Portal account continues, and its Importer Number on CBP Form 7501 is unaffected. As a result, the target entity retains legal standing to file CAPE Declarations for entries it filed as IOR prior to the transaction.

This sounds simple, but it creates a governance problem. After closing, the buyer controls the target entity, including its ACE Portal access, its customs broker relationships, and the decision of whether and when to file a CAPE Declaration. If the parties have agreed (or the deal documents provide) that the seller is entitled to the refund, the seller is entirely dependent on the buyer to file the claim, receive the funds, and then remit them. The seller cannot file independently after the entity has been transferred. This makes robust contractual mechanics and clear deal document language essential, not optional.

When a deal closes as a stock purchase, the buyer inherits control of everything tied to the target entity, including its ACE Portal access and its relationships with customs brokers. That means the buyer, operating through the acquired entity, files the CAPE Declarations and receives any refund money. For a seller who was the entitled party, this creates a real dependency: you can’t file on your own after the deal closes. You have to rely on the buyer to pursue the refund, collect the proceeds, and send you the money.

Accounting Treatment in a Stock Deal

For the acquired entity (now wholly owned by the buyer), the IEEPA tariff refund represents a recovery of costs previously expensed to COGS. Under the loss recovery model (ASC 410-30 by analogy), the entity can recognize a receivable when recovery is probable, reducing COGS in the period of recognition. Under the gain contingency model (ASC 450-30), recognition is deferred until the refund is formally approved or received.

The allocation question – which economic party benefits from the refund – is a commercial matter determined by the purchase agreement, not by GAAP. If the deal documents provide that the seller retains the economic benefit of pre-closing tax refunds (which is common), and if the parties extend that concept to tariff refunds (which 2025 deal documents typically did not), the entity’s receipt of the CAPE refund creates a liability to the seller equal to the agreed-upon amount. The accounting for that liability is separate from the accounting for the refund receivable itself.

Asset Deals: A Fundamentally Different Problem

In an asset purchase, the buyer acquires specific assets and assumes specific liabilities of the selling business, but the selling entity itself remains a separate legal person. The buyer forms (or uses) a different legal entity to hold the acquired assets. The seller’s EIN, its ACE Portal account, or its Importer Number are not automatically transferred to the buyer or by operation of law.

The consequence for IEEPA refunds is direct: in a pure asset deal, the original importing entity (the seller) remains the legal IOR for the pre-acquisition entries. The buyer’s new entity is not the IOR and cannot file CAPE Declarations for those entries. The seller retains both the legal standing to file and, absent specific contractual language to the contrary, the economic right to the refund.

Whether any of the refund flows to the buyer depends entirely on the purchase agreement. Most 2025 asset purchase agreements do not include specific language regarding IEEPA tariff refunds because those refunds did not yet exist as a cognizable legal right when the deals were negotiated. The typical tax refund provisions found in asset purchase agreements, which allocate refunds of pre-closing taxes to the seller, may or may not extend to customs duty refunds depending on how ‘taxes’ is defined in the agreement.

The Assignment Problem

Some parties in asset deals have explored formal assignments of refund rights to transfer the economic benefit to the buyer. This approach faces significant legal obstacles.

A structuring approach that survives this limitation: the seller (as IOR) files the CAPE Declaration, receives the refund from CBP, and remits the agreed-upon amount to the buyer pursuant to a contractual obligation in the purchase agreement. This preserves the IOR’s standing with CBP while allowing the economic benefit to flow to the intended party. It requires the seller’s continued cooperation, which is a real operational dependency, and it requires clear contractual mechanics specifying the seller’s filing obligations, timeline, and remittance terms.

Practical Due Diligence Point for Buyers

If you are acquiring a business with significant import history during the IEEPA period, identify the target’s IOR status on each relevant entry and the total potential IEEPA refund as a deal diligence item. This is a recoverable asset that belongs somewhere. Make sure the purchase agreement expressly addresses it, either by allocating the right to the buyer (with the seller’s cooperation obligations to file and remit), allocating it to the seller (with the buyer’s agreement not to interfere), or establishing a shared arrangement with specific percentages and mechanics.

Balance Sheet and Income Statement Treatment by Transaction Structure

The accounting model used by the entity that holds the IOR, and ultimately receives the CBP refund, depends on the same analysis described in the preceding article: loss recovery model or gain contingency model, based on how the tariff costs were originally recorded.

What distinguishes stock deals from asset deals is the identity of the entity and how the inter-party obligation flows back to the economic beneficiary.

• In a Stock Deal, the acquired entity applies its chosen GAAP model (loss recovery or gain contingency) and recognizes the refund receivable and income at the appropriate time. If the deal documents provide that some or all of the refund belongs to the seller, the entity records a corresponding liability to the seller, typically as a purchase price adjustment or as a current payable. The income statement treatment depends on whether the refund is characterized as a pre-closing period item subject to purchase price adjustment or as a post-closing operating item. This is a judgment call that should involve both accounting advisors and tax counsel.
• In an Asset Deal: The seller (as IOR) applies its GAAP model and recognizes the refund on its own books. If the deal documents obligate the seller to remit some or all of the refund to the buyer, the seller records a corresponding payable. From the buyer’s perspective, amounts receivable from the seller represent either a contingent purchase price adjustment or a separate receivable, depending on the arrangement’s structure. The buyer does not record the CBP refund as income; instead, it recognizes the amount received from the seller under the applicable GAAP.

This distinction has real implications for financial statement presentation. Sellers and buyers in asset deals should not both be recording the full CAPE refund as income. The economic benefit belongs to one party or the other (or is shared), and the accounting should reflect that allocation, not the statutory pathway through which CBP delivers the money.

What Deal Documents From 2025 You Probably Need to Address Now

If you closed a deal in 2025 and the purchase agreement is silent on IEEPA tariff refunds, the practical options are a post-closing amendment or a side agreement allocating the refund, a dispute resolution mechanism if the parties disagree about entitlement, or litigation, which nobody wants.

For active deals in negotiation right now, the refund allocation should be an express deal point. The questions to resolve: Which party is entitled to the economic benefit? Who bears the obligation to file (if the seller is IOR in an asset deal, does the seller have an affirmative obligation to file and remit)? What timeline applies? How are customer recoupment claims and downstream reimbursement demands allocated? Who controls the decision to file protests for entries outside Phase 1 eligibility?

The refund amounts are large enough, and the legal framework novel enough, that leaving these questions to implication is a significant commercial risk. Gray, Gray & Gray advises clients on both the accounting and tax dimensions of tariff refund allocation in M&A contexts, and can help structure the analysis across your transaction portfolio. Contact us to discuss your situation.