Tariff Accounting for Ecommerce Sellers: The 2026 Guide

Import duties are part of your inventory cost. Under ASC 330 they get capitalized into the value of the goods you bought, sit on the balance sheet until those units sell, and hit your P&L through cost of goods sold. They're not a shipping expense, not an "other cost," and not a lump you can dump into whatever month you happened to pay Customs. That one rule, applied consistently, is the difference between books that show what tariffs did to your margins and books that just show a scary freight number.

In 2026 the difference is real money. Duty rates that sat at 3% for a decade now run 10% to 30%-plus depending on product and country, the $800 de minimis exemption that let small direct-import parcels skip duty entirely is gone as of August 2025, and every importer we work with is paying Customs more this year than in any prior year of their business. Here's the full accounting picture: capitalize vs expense, landed cost per SKU, refunds, repricing math, and the cash plan for duty payments.

Capitalize or expense? ASC 330 already answered it

Accounting standards treat inventory cost as everything "directly or indirectly incurred in bringing an article to its existing condition and location." Duties qualify on the plainest reading: the goods legally can't reach your warehouse without them. So do inbound freight, brokerage fees, and merchandise processing fees. All of it belongs in inventory, then flows to COGS as units sell.

Watch what happens when a seller expenses duties instead. Say you land a container in March with $40,000 of duty on it, and the goods sell evenly over the next five months. Expensed, March shows a $40,000 hit against sales that mostly haven't happened yet: margins crater, and the owner spends a week hunting for a problem that doesn't exist. April through August then show margins several points better than reality, because those months sell duty-loaded inventory that carries no duty cost on paper. Every month is wrong. The year total is right, which is exactly why the error survives: the tax return looks fine while every operating decision made off monthly numbers gets made on fiction.

Capitalized, the same $40,000 rides with the units. March margin is normal. Each sale from that container carries its true cost. Your gross margin line finally answers the question you're actually asking: are we still making money on this product at the new duty rate?

Why lenders and buyers check this line first

Diligence teams learned fast that tariffs are where 2025-era books lie. A quality of earnings analyst looking at an importer now tests duty treatment almost immediately, for two reasons. First, expensed tariffs make monthly margins volatile, and volatile margins get discounted or rebuilt on the buyer's assumptions rather than yours. Second, expensing duties understates the inventory number on your balance sheet, which understates working capital, and the working capital peg moves purchase price dollar for dollar.

Lenders run the same check from the other direction. An inventory-backed line of credit advances against inventory value; if your $500,000 of inventory is really $560,000 once duties are capitalized properly, you've been leaving borrowing capacity on the table. And if it's booked at $560,000 without support, expect the field exam to haircut it. Either way, the seller with per-SKU landed costs and a consistent capitalization policy gets believed, and belief is what both lenders and buyers are pricing.

Doing this properly generally requires accrual books with a real inventory asset, which is its own project if you're on cash basis today. Our cash to accrual conversion guide walks through that step by step.

The tax side: Section 263A and the small-seller exemption

Tax law mostly agrees with GAAP here. Section 263A (the uniform capitalization rules) requires resellers to capitalize duties and inbound freight into inventory for tax purposes. There's a small-business exemption for taxpayers under roughly $31 million in average annual gross receipts (the threshold adjusts for inflation), which covers most sellers reading this. But exemption from UNICAP doesn't mean "expense whatever you like": if you account for inventory at all, duties that attach to specific goods belong in the cost of those goods, and the IRS's book-conformity rules for small taxpayers point your tax treatment back at your books anyway.

The practical takeaway: capitalize duties in your books, let the tax treatment follow, and stop maintaining two theories of what your inventory cost. Your CPA will thank you, and so will whoever eventually reads the file.

Landed cost per SKU, by country of origin

Landed cost accounting is the operational half of this. The formula per unit:

Landed cost = supplier unit price + allocated inbound freight + duty (HTS rate x customs value) + brokerage and entry fees, divided down to the unit.

Country of origin is now the biggest swing in that formula, which means the same SKU can carry two different landed costs in the same warehouse. Here's a real-shaped example for a kitchen gadget with an $8.00 FOB price:

Cost component	Sourced from China	Sourced from Vietnam
Supplier unit price (FOB)	$8.00	$8.60
Duty (rate x customs value)	$2.40 (30%)	$0.86 (10%)
Freight + brokerage per unit	$0.95	$1.10
Landed cost per unit	$11.35	$10.56

The Vietnam supplier quotes 7.5% higher and still wins by 79 cents a unit. You cannot see that from supplier invoices, and you can't see it from a books file where duty sits in one undifferentiated expense account. Sourcing decisions in 2026 are landed-cost decisions, full stop.

Track it at the SKU-and-origin level: when you receive a shipment, allocate the entry's total duty and freight across the units on it (by value for duty, by weight or cubes for freight), and record that batch's landed cost. Inventory software handles this natively; a disciplined spreadsheet handles it fine at smaller scale. What doesn't handle it is nothing, which is the most common system we see. The mechanics of turning landed cost into monthly COGS are in our COGS formula guide.

Where tariffs live in your chart of accounts

Two accounts do the work. On the balance sheet, inventory (1310 in our chart of accounts template) holds capitalized duty as part of item cost. In COGS, an account like 5020 Inbound Freight & Duties receives the duty portion as goods sell, so you can watch duty as a percent of COGS trend over time instead of losing it inside blended product cost.

A workable monthly routine for sellers without inventory software: post duty payments to inventory when paid, then release them to 5020 in proportion to units sold from the affected receipts. It's one journal entry a month once the landed-cost sheet exists. Crude allocation beats no allocation by a mile; the sin isn't imprecision, it's expensing on payment date.

Accounting for tariff refunds

Tariff refunds went from an obscure topic to a live one, because sellers now have three ways money comes back from Customs:

• Duty drawback. Export goods you imported (or destroy them under supervision) and you can recover 99% of the duty paid. For ecommerce that mostly means international sales fulfilled from US inventory and returns you re-export. Claims can reach back years, and at 2026 duty rates the math that wasn't worth the paperwork at 3% often is at 25%.
• Corrections and protests. Misclassified HTS codes and overstated customs values get fixed through post-summary corrections (available for roughly 300 days after entry) or protests (180 days after liquidation). Classification reviews are finding real money this year; a two-point rate difference on a year of imports adds up.
• Litigation outcomes. Court challenges to specific tariff programs have periodically produced refunds for importers who paid under them and preserved their rights. Whether that applies to you is a customs-counsel question, not a bookkeeping one, but the accounting below still governs the day a check arrives.

How to book a refund: it is not revenue. If the related units are still in inventory, reduce inventory (the goods now cost less). If they've sold, credit COGS in the period the refund becomes both probable and reasonably estimable, which for most sellers means when the claim is approved, not when it's filed. Don't book hoped-for refunds early; accounting treats contingent gains with a raised eyebrow, and so does every diligence analyst. Booked as revenue instead, a refund inflates your top line and overstates the very margin problem the tariff created, so the books lie twice.

The prerequisite for every refund path is the same paper trail: entry summaries tied to receipts tied to per-SKU landed costs. Sellers who kept that trail file drawback claims from a report. Sellers who didn't pay a consultant to reconstruct it for a cut of the recovery.

The repricing math: what a tariff actually does to your price

Now the decision the accounting exists to support. Take that China-sourced gadget: landed cost went from $8.95 pre-tariff to $11.35, a $2.40 increase. It sells for $24.99 on Amazon with a 15% referral fee and $6.50 of fulfillment cost. The temptation is to raise price by $2.40. That's wrong, because every added dollar of price gives 15 cents back to the marketplace.

To recover a $2.40 cost increase through price, divide by one minus the fee percentage: $2.40 / 0.85 = $2.82. New price $27.81, call it $27.99. Check the margins: before, $24.99 brought $3.79 of contribution after referral fee, fulfillment and landed cost. At $27.99 with the tariffed cost, contribution lands within a few cents of the same dollar figure. Your margin percentage still falls (same dollars on a bigger price), which matters if you steer by percentages, and your conversion rate at $27.99 is a real question the accounting can't answer. But at least you're deciding with the true numbers instead of discovering the gap at year end.

Run this SKU by SKU, not storewide. Products from low-tariff origins may need no change, and a blanket 10% price increase quietly donates margin on some SKUs while under-recovering on the ones that got hit. That per-SKU visibility is the entire payoff of landed cost accounting, and skipping the price response is one of the leaks our money leak checklist makes sellers check for a reason.

Cash-flow planning for duty payments

Here's the part the P&L hides: capitalized or not, duty is cash out the door months before the related revenue shows up. Duties are generally due within about ten days of entry, or consolidated to the following month if you're on a periodic monthly statement with your broker. A $60,000 container at a 25% rate means writing a $15,000 check while the goods are still on a truck to the warehouse, weeks before a single unit sells and longer before the marketplace pays out.

Plan it like the real liability it is:

• Build a duty calendar from your PO schedule. Each planned shipment's estimated duty (customs value x current rate) goes on the cash forecast at its expected entry date. When rates move, the forecast moves with the next PO, not the next surprise.
• Get on a periodic monthly statement if you're not; consolidating entries to one payment date simplifies both cash timing and reconciliation.
• Price deferral options against your cost of cash. Bonded warehouses and foreign-trade zones defer duty until goods leave the facility, which converts a lump at entry into payments matched to sell-through. The fees only pencil at meaningful volume, but at 25% rates they pencil far sooner than they used to.
• Hold a duty reserve. A seller importing $80,000 a month at blended 20% needs roughly $16,000 of monthly cash earmarked before ads, payroll or draws. Sellers who skip this end up funding Customs on a credit card at 24% interest, which is a worse tariff.

What to do this quarter

The list is short. Get duties out of your expense accounts and into inventory with a consistent policy. Build the per-SKU, per-origin landed cost sheet, then reprice the SKUs the math says to reprice. Pull your last twelve months of entry summaries and look for drawback and classification money. Put next quarter's duty on the cash forecast.

If your books currently show tariffs as one growing lump in a freight account, that's fixable, and it's the kind of thing our free Books Teardown catches in the first pass; request one here and we'll show you what your real margins look like with duty where it belongs. Landed cost tracking and duty-aware COGS are standard in our monthly bookkeeping plans, and if lost import paperwork is part of the story, that's what a catch-up project is for. Tariffs are expensive enough without your books making them look worse than they are.