June 10, 2025

U.S. Senate
Washington, D.C. 20510

Dear Senator,

You will soon be considering H.R. 1, the One Big Beautiful Bill Act.  On behalf of the more than one million members and supporters of the Council for Citizens Against Government Waste (CCAGW), I urge you to maintain the provision of H.R. 1 that would end the double drawback loophole.

Dating back to the Tariff Act of 1789, the U.S. has allowed companies to claim a drawback on duties and tariffs paid on goods that are stored in the U.S. but are sold abroad.  When first begun, this policy was an effective tool at attracting business and maintaining the U.S. as an important stop in global supply chains.  The use of drawbacks was expanded in 2004 by the Miscellaneous Trade and Technical Corrections Act.  Unfortunately for taxpayers, this legislation created an unintended loophole allowing U.S. companies to claim a drawback refund for products stored in their bonded warehouses, even if they never paid excise taxes on these products.  This problem was further exacerbated by the Trade Facilitation and Trade Protection Act of 2015, which expanded the number of industries that could claim this drawback.  Since 2015, many tobacco manufacturers have moved their production out of the U.S. to take advantage of this loophole. 

The double drawback loophole is a great deal for tobacco manufacturers but has dire consequences for American farmers and manufacturing jobs.  According to a May 13, 2025 report by the Joint Committee on Taxation, repealing the double drawback loophole for tobacco products would raise $12.1 billion over the next 10 years.  Keeping Section 112031 of H.R. 1, the One Big Beautiful Bill Act, would close this loophole and help make domestic manufacturers more competitive, while saving taxpayer dollars. 

The double drawback loophole is an unfair provision of the tax law that allows companies to claim a refund on excise taxes that they never paid.  Repealing the double drawback loophole would save taxpayer dollars and protect American farming and manufacturing jobs.  For these reasons, I urge you to keep Sec. 112031 in H.R. 1.  All votes related to H.R. 1 may be among those included in CCAGW’s 2025 Congressional Ratings.   

Sincerely, 

Tom Schatz 
President, CCAGW