Manufacturing companies potentially owed tariff refunds are being told by their accountants to slow down — because recording money that hasn’t arrived yet could create serious problems on the books.
“Unless it’s in your bank account,” companies should be careful about recording the refund, Thomas Alongi, partner at national accounting and advisory firm UHY, said in a June 25, 2026, interview. Alongi, who has spent more than 25 years working with automotive and manufacturing clients, said navigating IEEPA tariff refunds has become one of the most pressing issues he is fielding from CFOs in the manufacturing sector. The warning highlights a problem emerging across the industry: the legal case for refunds may be strong, but the accounting answer is far from settled.
The issue became urgent after the Supreme Court’s ruling struck down tariffs imposed under the International Emergency Economic Powers Act (IEEPA). The ruling left importers with the same question: can we put that refund on the books now, or do we wait for actual cash?
Most advisers say wait.
“There has been certainly some divergence in practice — i.e. some are booking it, and some are not,” Alongi said. “There is no published U.S. GAAP specifically addressing the current tariff situation.”
That gap is not a technicality. It means two companies in identical legal positions can report dramatically different earnings — simply because one booked a receivable and the other put a footnote in its filing. Investors comparing those companies are not looking at the same picture.
The core problem
Think of it this way. A company paid tariffs it now believes were illegal. The Supreme Court agreed. So why can’t it just record the refund as money coming in?
Because under standard U.S. accounting rules, a refund a company expects to receive but hasn’t collected yet is treated as a “gain contingency” — and the rules generally prohibit booking that as income until the money is realized. The logic is conservative by design: don’t count a windfall until it lands.
Joshua Chananie, a partner, board member, and consumer products leader at SAX Advisors, said the danger of booking too early is straightforward. Because the refund would typically reduce cost of goods sold, recording it prematurely overstates gross profit — and taxable income. “You are accelerating revenue recognition and potential taxable income by pulling forward the revenue,” he said in a June 25 emailed response.
If a company books the refund and later finds out the money isn’t coming, the correction is painful. Chananie said it would likely require a prior-period adjustment — if the adjustment is material — essentially going back and restating earlier financial statements, reducing retained earnings. That is the kind of restatement that makes auditors, investors, and regulators nervous.
Two rules, two different outcomes
There are two accounting models companies can legally use here, and they produce different results.
The first — the gain contingency model under ASC 450-30 — says wait until cash is effectively in hand before recognizing anything. The second — the involuntary conversion loss recovery model under ASC 410-30-35-8 through 35-10 — allows earlier recognition if receiving the money is considered probable.
Alongi said for companies whose fiscal year ended December 31, 2025, the answer should be clear: the Supreme Court ruling came after that date, so it cannot be put on the books for that period. It must be disclosed in footnotes as a Type II subsequent event, but nothing more. For reporting periods that include or follow the ruling — meaning most current filings — the analysis gets harder, and Alongi said more than one approach may be acceptable depending on a company’s specific facts.
The problem is that companies are already splitting on which path to take. Some are booking refunds as receivables; others are recognizing nothing and disclosing only in footnotes. Same legal situation. Completely different financial statements.
Chananie said there is “no hard and fast guidance” on this specific issue, which means the answer rests heavily on auditor judgment. He said auditors should err on the side of conservatism. “Disclosure is the preferable option,” he said — meaning tell investors the refund may be coming in a footnote, but do not treat it as income yet.
Government payment uncertainty remains
The accounting uncertainty is made worse by the fact that the government itself is not fully committed to paying. Chananie noted that the belief among advisers is that the matter will be dragged back to court, and that there remains a look-back period during which claims can be audited — no different from other recent programs like the Paycheck Protection Program (PPP) and the Employee Retention Credit (ERC).
Companies also need to consider whether refunds are collectible, when the government releases the money, how much is paid, and whether any portion must be returned to customers — a live question for companies that passed tariff costs through to buyers via surcharges.
What companies need to do
The refund opportunity is real, but it requires action. Alongi said CFOs are asking two kinds of questions: how to successfully navigate the refund process, and whether they can book anticipated refunds as a receivable before the money arrives. On the first question, Alongi noted that confirming a company is the Importer of Record and understanding which tariff entries are eligible for refund is a more complex determination than it might appear, given the intricacies of the harmonized tariff system. UHY’s tariff team works with clients directly to navigate that process. On the second question, his answer is consistent: wait.
On the accounting side, the message from advisers is clear: pursue the refund, protect the legal claim, and disclose the potential recovery clearly in financial statement footnotes. Do not record it as income before the money arrives.
As Alongi put it, the advice to clients is to not book anything until refunds are received.
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