Tax relief available for Sinlaku-damaged businesses, residents told

Businesses and residents whose properties were damaged by Super Typhoon Sinlaku may qualify for tax relief, including casualty loss deductions and other tax assistance programs, according to tax experts who led a community workshop last June 12 at Casa Marianas.

However, individual taxpayers generally can claim only up to a $100 casualty loss deduction under current federal tax law, while businesses may deduct unreimbursed losses without the same limitation.

The workshop, hosted by Azarvand Tax Law, featured tax attorney Tina Azarvand and CNMI Division of Revenue and Taxation director Daniel Alvarez, who discussed disaster-related tax rules, filing deadlines, refund processing and tax debt relief options available after the storm.

“We had a community workshop on Sinlaku focusing on the casualty loss deductions as well as a few different programs that are available for insolvent taxpayers and businesses alike,” Azarvand told reporters after the event. “Really the focus was on making sure people know what they can and can’t deduct on their taxes and the special rules.”

Azarvand said taxpayers affected by Sinlaku have a special option to claim disaster-related losses on either their 2025 or 2026 tax returns.

“One rule we did cover before you got here was 2025, you can actually deduct those losses,” she said. “There’s a special rule, so you kind of have, or you do have the option of looking at, do you want to file this on ’25 or ’26 for your casualty loss deductions.”

She noted that while both businesses and individuals can claim casualty losses, federal law offers significantly greater relief to businesses.

“The Internal Revenue Code was not really written to the individual’s favor,” Azarvand said. “The CNMI has no control over what the federal law says, which only allows individuals a deduction, you know, in this scenario would be up to $100.”

Businesses, meanwhile, may deduct losses not covered by insurance, Federal Emergency Management Agency assistance, or other forms of disaster aid.

“Businesses, they have no limitation, so it’s just applicable to what their actual losses are,” Azarvand said.

She also clarified that FEMA disaster assistance generally is not taxable income.

“It is not taxable income,” Azarvand said. “The only time you will be faced with taxable income post-Sinlaku was in the very rare chance you had business interruption insurance, or if your insurance proceeds just in general exceeded the amount the asset was actually worth.”

Azarvand said businesses can deduct losses that remain after reimbursements are received.

“This is very, very beneficial to businesses, because whatever they didn’t recoup through reimbursement from insurance, FEMA, Samaritan’s Purse, otherwise, then they are able to take that difference as a deduction,” she said.

During the presentation, Azarvand explained that disaster-related losses are generally claimed using IRS Form 4684. She advised taxpayers to maintain documentation such as photographs, receipts, deeds and other records to support claims. She also discussed programs such as offers in compromise, penalty abatements and currently-not-collectible status that may help taxpayers struggling with tax obligations following the typhoon.

The presentation also covered filing extensions granted after Sinlaku. Most CNMI income tax returns that would normally have been due April 15 have been extended to Oct. 15, while certain federal filings have separate deadlines.

Alvarez provided an update on tax refunds, saying the Division of Revenue and Taxation has resumed issuing refunds and is processing them daily as technical issues related to a new tax software system are resolved. He said about 90% of returns currently can be processed, with more complex returns expected to follow as additional system improvements are completed.