Why are reconciliation entries excluded from CAPE Phase 1?

CBP's published Phase 1 scope refunds duties on entries that are either still unliquidated or that liquidated within roughly the past 80 days. Reconciliation entries are different by design — under 19 USC 1401(s) and the ACE Reconciliation Prototype, the underlying entry stays open while a reconciliation flag is active so the importer can true up specific elements (value, 9802, classification, NAFTA/USMCA) up to 21 months later. Because the IEEPA-duty amount on a reconciliation-flagged entry is not final until reconciliation closes, CBP's accounting cannot deterministically refund through the standard CAPE path. That is why reconciliation entries appear on CBP's Phase 1 exclusion list alongside AD/CVD, drawback, pending-protest, suspended, and warehouse entries.

Has CBP said anything about how Phase 2 will treat reconciliation entries?

Not specifically. CBP has acknowledged that excluded categories will be addressed in subsequent phases but has not published a Phase 2 timeline or technical spec as of May 2026. Reasonable inference, based on how CBP has historically handled reconciliation refunds outside the CAPE context, is that Phase 2 will either (a) accept reconciliation entries only after the reconciliation closes and the duty is fixed, or (b) provide a separate workflow that lets importers file a CAPE-equivalent declaration tied to the reconciliation entry number rather than the underlying entry. Either way, the work to identify in-scope entries and quantify exposure is the same, so it can be done now.

How do I identify which of my entries are reconciliation-flagged?

Pull an ACE entry summary report filtered by reconciliation indicator for the period February 1, 2025 through February 24, 2026 (the IEEPA-tariff period). Most large importers can run this through their existing ACE Trade Account Owner. The report will list every entry summary with an active reconciliation flag, the type of reconciliation (value, 9802, classification, USMCA), and the reconciliation due date. Cross-reference each row against the IEEPA Chapter 99 indicators (HTS 9903.01.25 through 9903.01.70) to isolate the IEEPA exposure on those entries.

Should I file a protest as backup while waiting for Phase 2?

Yes, in many cases — especially for any reconciliation entries where the underlying entry liquidates within the protest window. The 180-day protest deadline runs from liquidation, not from CBP's CAPE rollout. If a reconciliation entry liquidates and you wait passively for Phase 2, you may lose the protest right entirely. Trade counsel should review the reconciliation calendar against the protest deadlines for every flagged entry and file protective protests where the deadline is approaching. CIT litigation may also be relevant for any reconciliation entries that fully liquidate before Phase 2 specifics are published. See our protest filing guide and the CAPE-vs-protest-vs-CIT decision flow for how the three paths interact.

Can I close my reconciliation early to qualify for CAPE Phase 1?

Technically you can close a reconciliation early, but doing so just to chase Phase 1 inclusion is rarely advisable without counsel review. Closing reconciliation early may forfeit the very deferral benefit that justified the flag in the first place — for example, value reconciliation often hinges on year-end transfer-pricing studies that are not finalized until well after the importer year-end. Run the math: the IEEPA refund amount versus the duty exposure on the reconciliation element you would lock in early. For most large importers the reconciliation deferral is worth more than the timing benefit of jumping into Phase 1, so the sensible path is to prepare the data and wait for Phase 2 specifics.

Reconciliation Entries and CAPE Phase 2: What to Prepare Now

Reconciliation entries are one of the largest excluded categories in CAPE Phase 1, and they affect almost exclusively the largest, most sophisticated importers — multinationals, transfer-pricing-driven supply chains, USMCA preference claimants, and 9802 assemblers. If your finance team relies on reconciliation, your IEEPA refund clock has not started yet, but the preparation clock has.

This post explains why reconciliation entries were excluded, what Phase 2 is likely to look like, and the four things to do this week.

Reconciliation entries IEEPA refund preparation for CAPE Phase 2

Why CBP Excluded Reconciliation Entries from Phase 1

The Consolidated Administration and Processing of Entries (CAPE) system was designed to refund duties on entries where the duty amount is final or can be made final quickly. CBP’s Phase 1 scope is intentionally narrow: unliquidated entries, plus entries that liquidated within roughly the past 80 days that can be reliquidated as part of the next weekly liquidation cycle.

Reconciliation entries break that model. Under the ACE Reconciliation Prototype, an importer flags an entry summary at the time of filing to indicate that one or more elements — value, 9802 American Goods Returned, classification, USMCA preference — will be trued up later. The underlying entry stays open. The actual duty amount is not finalized until the importer files a reconciliation entry within the 21-month window. Until then, CBP cannot tell you what duty was finally owed, and therefore cannot calculate a refund.

That is the technical reason. The practical reason is that reconciliation is an accounting layer entirely separate from the CAPE workflow, and CBP did not want to delay Phase 1 launch to integrate the two.

What Phase 2 Is Likely to Look Like

CBP has not published Phase 2 specifications as of May 2026. Two scenarios are most plausible based on how the agency has historically handled reconciliation refunds:

Scenario A — Wait-then-file. CBP requires importers to wait until reconciliation closes and the duty is finalized, then file a CAPE-equivalent declaration referencing the closed reconciliation entry. This is procedurally cleanest for CBP but slowest for importers, particularly those with reconciliation due dates 12 to 18 months in the future.

Scenario B — Parallel-track filing. CBP opens a separate CAPE workflow that lets importers file a refund declaration tied to the reconciliation entry number rather than the underlying entry, with a settlement step at reconciliation close. This is faster for importers but more complex for CBP to build.

Either way, the data preparation work is identical, which is why it can start now.

Four Things to Do This Week

1. Pull a reconciliation-flagged entry list for the IEEPA period. Have your ACE Trade Account Owner run an entry summary report filtered by reconciliation indicator for entries between February 1, 2025 and February 24, 2026. Cross-reference each row against IEEPA Chapter 99 indicators (HTS 9903.01.25 through 9903.01.70) to isolate the IEEPA-duty exposure. Use our step-by-step guide to ACE Portal account setup if your account access needs refreshing.

2. Calendar protest deadlines for every flagged entry. The 180-day protest deadline runs from liquidation. Reconciliation entries can and do liquidate. If you wait passively for Phase 2, you may lose the protest right on entries whose underlying liquidation happens before Phase 2 opens. Trade counsel should run the dates and file protective protests where deadlines are approaching. Our CAPE-vs-protest-vs-CIT decision flow walks through which path fits which entry posture.

3. Decide on early-close versus wait-it-out. For each reconciliation flag, weigh the IEEPA refund amount against the duty exposure on the reconciliation element you would lock in by closing early. For most large importers the reconciliation deferral is worth more than the timing benefit of Phase 1 inclusion, so the right answer is usually to prepare the data and wait. But run the math entry by entry rather than as a portfolio decision.

4. Get your case reviewed before Phase 2 specs drop. Phase 2 is likely to compress timelines once CBP publishes the workflow. Importers who already have a quantified exposure spreadsheet and a counsel-vetted strategy will file in the first week; everyone else will be in the queue. Get a free assessment so the right trade attorney is already lined up when CBP opens the door.

What to Expect Next from CBP

Watch for Phase 2 announcements through CSMS messages, the CBP IEEPA Refunds page, and the trade-law firms that track this closely (Sandler Travis & Rosenberg, Diaz Trade Law, Husch Blackwell). Our CSMS message index and CAPE Update Tracker are kept current with each new official checkpoint.

If your reconciliation portfolio includes meaningful IEEPA exposure, request a free assessment and we will connect you with vetted trade counsel familiar with reconciliation-CAPE coordination.