House and Senate Pass Legislation to Repeal the FSC/ETI Tax Regime, Extend MPF and Other User Fees, Etc

As the House and Senate passed different versions of this legislation, a House-Senate conference was held to resolve the differences. On October 7, 2004, the House passed the conference version of H.R. 4520. The Senate passed the conference version of H.R. 4520 on October 11, 2004. The next step is for H.R. 4520 to be signed into law (enacted) by the President.

EU says it will study details of conference version of H.R. 4520. In response to the House and Senate passage of the conference version of H.R. 4520, European Union (EU) Trade Commissioner Lamy stated that he was pleased that Congress has finally taken this step towards U.S. compliance with the WTO ruling and that the EU will now carefully study the details in the conference version, in particular regarding transition periods, grandfathering clauses, as well as other relevant fiscal provisions.

(Since March 1, 2004, the EU has imposed additional customs duties on imports of certain U.S.-origin products in connection with the EU's World Trade Organization (WTO) dispute over the U.S. FSC/ETI tax regime. As of October 1, 2004, the level of the additional duties is 12% and is scheduled to increase another 1%, to 13%, on November 1, 2004.)

This is Part I of a multi-part series of summaries highlighting the conference version of H.R. 4520, and covers the provisions regarding the MPF and Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) user fees. See future issues for additional summaries.

Extension of MPF and COBRA User Fees Through September 30, 2014

The conference version of H.R. 4520 would amend 19 USC 58c(j)(3) in order to extend, through September 30, 2014, the MPF (both formal and informal) provided for in 19 USC 58c(a)(9) and (10) and the COBRA user fees provided for in 19 USC 58c(a)(1) through (8).

(The MPF and COBRA user fees are currently scheduled to expire on March 1, 2005. See ITT's Online Archives or 03/10/04 news, 04031005, for previous BP summary.)

Relating COBRA User Fees to Cost of Services; Allowing COBRA Fees to Exceed Statutory Levels by 10%

The conference version of H.R. 4520 would amend 19 USC 58c(j)(3) to state that for the COBRA user fees, in fiscal year (FY) 2006 and in each succeeding FY for which these fees are authorized:

the Treasury Secretary shall charge fees in amounts that are reasonably related to the costs of providing customs services in connection with the activity or item for which the fee is charged, except that in no case may the fee charged exceed by more than 10% the amount otherwise prescribed in 19 USC 58c(a)(1) through (8);

the amount of fees collected may not exceed, in the aggregate, the amounts paid in that FY for the costs described in 19 USC 58c(f)(3)(A) incurred in providing customs services in connection with the activity or item for which the fees are charged;

a fee may not be collected except to the extent such fee will be expended to pay the costs described in 19 USC 58c(f)(3)(A) incurred in providing customs services in connection with the activity or item for which the fee is charged; and

any fee collected shall be available for expenditure only to pay the costs described in 19 USC 58c(f)(3)(A) incurred in providing customs services in connection with the activity or item for which the fee is charged.

Customs User Fee Account to Pay for Customs Revenue Functions and Automation

The conference version of H.R. 4520 would amend 19 USC 58c(f), regarding the disposition of funds in the Customs User Fee Account, so that it states that except as otherwise provided in 19 USC 58c(f), all funds in the Customs User Fee Account shall be available, to the extent provided for in appropriations Acts, to pay the costs (other than costs for which direct reimbursement under 19 USC 58c(f)(3) is required) incurred by CBP in conducting customs revenue functions as defined in section 415 of the 2002 Homeland Security Act (other than functions performed by the Office of International Affairs referred to in section 415(8) of that Act), and for automation (including the Automated Commercial Environment (ACE) computer system) and for no other purpose.

(See ITT's Online Archives or 02/11/03 news, 03021105, for the definition of "customs revenue functions" as defined in the 2002 Homeland Security Act.)

If Customs User Fee Account Insufficient to Pay for Customs Revenue Functions, Duties Could be Appropriated

The conference version of H.R. 4520 would also amend 19 USC 58c(f) to state that to the extent that funds in the Customs User Fee Account are insufficient to pay the costs of such customs revenue functions, customs duties in an amount equal to the amount of such insufficiency shall be available, to the extent provided for in appropriations Acts, to pay the costs of such customs revenue functions in the amount of such insufficiency, and shall be available for no other purpose.

(In addition, the conference version of H.R. 4520 would amend 19 USC 58c(f) to state that the above provisions specifying the purposes for which amounts in the Customs User Fee Account may be made available shall not be superseded except by a provision of law which specifically modifies or supersedes such provisions.)

Appropriated Funds Other Than COBRA Fees Could be Used for Certain Salaries, Overtime/Premium Pay, Etc.

The conference version of H.R. 4520 would also amend 19 USC 58c(f)(3), which provides for the reimbursement of appropriations from COBRA fees, by adding a sentence which states that nothing in 19 USC 58c(f)(3) shall be construed to preclude the use of appropriated funds, from sources other than fees collected under 19 USC 58c(a), to pay the costs set forth in certain provisions related to paying certain salaries, overtime compensation, premium pay, etc.

Treasury to Study All of DHS Fees

The conference version of H.R. 4520 would require the Secretary of the Treasury to conduct a study of all the fees collected by the Department of Homeland Security (DHS), and submit a report to Congress, no later than September 30, 2005, containing the recommendations of the Secretary on: (i) what fees should be eliminated; (ii) what the rate of fees retained should be; and (iii) any other recommendations with respect to the fees that the Secretary considers appropriate.

Clerical Amendments

H.R. 4520 would also make various clerical amendments to 19 USC 58c, including adding punctuation, aligning clauses, etc.

EU Trade Commissioner statement (dated 10/11/04) available at http://europa.eu.int/comm/trade/issues/respectrules/dispute/pr111004_en.htm

Information on the Conference version of H.R. 4520, including conference report text etc., available at http://waysandmeans.house.gov/Links.asp?section=1559.