WASHINGTON: The Supreme Court ruled the International Emergency Economic Powers Act tariffs unconstitutional on February 20, 2026, ordering the federal government to return approximately $166 billion collected from more than 330,000 businesses. U.S. Customs and Border Protection has spent two months building the refund infrastructure. The CAPE system (Consolidated Administration and Processing of Entries) goes live April 20. For small business founders who assumed that meant a check was on the way, there is a catch buried in the eligibility rules that most haven’t found yet.
How the IEEPA Tariff Refund Process Actually Works
In Learning Resources, Inc. v. Trump, the Supreme Court held 6-3 that IEEPA does not authorize the president to impose tariffs. The February 20 ruling struck down duties that had been in effect since 2025, covering goods ranging from consumer electronics to industrial components. The justices ordered the revenue refunded, which sent CBP into the largest customs processing project in the agency’s history.
CBP has been building CAPE inside its existing ACE customs platform. The system has four components. Phase 1, which the Court of International Trade endorsed on April 1, will cover approximately 63% of the entries for which IEEPA duties were collected, according to a Thompson Hine trade analysis of the CIT decision. The remaining 37% will be addressed in subsequent phases, with no confirmed launch dates announced yet. CBP describes CAPE’s four components as 60 to 85 percent complete as of early April.
The mechanics are straightforward on paper: importers of record file claims through CAPE, CBP cross-references them against ACE entry records, and refunds flow back through the original payment channels. The bottleneck isn’t the system. It’s who counts as an importer of record in the first place.
When goods enter the United States, the company that clears customs and pays the duty is logged as the importer of record in CBP’s ACE database. That company filed the entry, paid the duty, and has a paper trail. CAPE was built to serve that company. Everyone downstream of that transaction (the distributor who bought the goods, the retailer who bought from the distributor, the founder who bought from the retailer) is invisible to CBP’s refund system.
Who Qualifies for an IEEPA Tariff Refund?
To receive a direct CBP refund, a business must be the importer of record: the company that paid customs duties at the U.S. border. If that describes your business, you are eligible to file a claim through CAPE when it opens April 20. If not, there is currently no federal refund mechanism available to you.
This eligibility gap is why millions of small businesses are on the wrong side of the refund process. A founder who sourced inventory from a domestic distributor never paid a customs duty directly; their supplier did. A restaurant buying imported ingredients from a food service company has no entry number on file with CBP. A retailer who absorbed tariff-inflated wholesale costs passed the expense through its supply chain, but the money that eventually reached the government passed through other hands first. CBP can only refund the party that sent it the check.
This is the gap that Fortune reported on April 6, describing it as millions of consumers and small businesses that won’t see a refund from the $166 billion in now-illegal tariff revenue. The framing in most trade compliance coverage treats this as a technical limitation of the customs system. For a small business founder who spent 2025 eating higher costs on every import-dependent product in their inventory, it reads differently.
Kelley Drye, a trade law firm that has been tracking the IEEPA refund process, notes that downstream parties may have civil remedies against their direct suppliers in some cases, depending on the contract language that governed pricing during the tariff period. Those would be private contractual disputes, not government refunds, with no guaranteed outcome and no federal process to support them.
What Happens After the April 20 Launch?
If your business was the importer of record, the April 20 date is the one to track. CBP has not yet published final CAPE filing instructions, but the agency has indicated that eligible importers will file through the existing ACE portal using entry data from their original customs filings. Customs brokers who handled import clearances in 2025 will have the entry numbers, duty payment records, and importer-of-record documentation needed to file. The first phase covers roughly 63% of eligible entries; CBP has not specified publicly which entry types fall into the remaining 37%, so confirming your Phase 1 status with your broker before April 20 is worth doing now.
For businesses that don’t qualify for direct CBP refunds, the legislative path is the only formal option on the table. Several bills have been introduced in Congress that would create a mechanism for downstream businesses to file claims, and advocacy organizations including the U.S. Chamber of Commerce have been lobbying to close the gap. None of those bills had passed as of early April 2026. Monitoring them through the Chamber or your industry trade association is the most actionable step available right now. Founders managing cash flow pressure while waiting may also want to review alternative financing structures; GJ covered how revenue-based financing lets businesses access capital without giving up equity, which can be useful while legislative timelines remain unclear.
The ruling reshaped the tariff landscape, but it didn’t simplify it. Other tariff structures remain in effect separate from the invalidated IEEPA duties. For founders still working through supply chain strategy in 2026, the tariff-proofing guide GJ published in March covers the diversification, contract, and sourcing strategies that apply regardless of which specific tariff authorities are in force. The refund process is a one-time event. The supply chain decisions are ongoing.
