Typhoons, Repairs, and the Tax Refund You Are Still Waiting On
by Tina Azarvand, Esq., LL.M.
Part One of this series covered the filing deadline extensions available to residents of Guam and the CNMI.
The question we have received most since that piece ran is a simpler one: when will you actually see your tax refund? The answer depends heavily on which government is cutting the check.
For context, the IRS issues most federal refunds in under 21 days for returns filed electronically with direct deposit, and over 80 percent of refunds this filing season cleared that window; paper returns, however, typically take 6 to 8 weeks to process. In contrast, states generally take 2 to 6 weeks to process e-filed returns, while paper filings at the state level can extend that timeline to 8 to 12 weeks depending on the state.
The CNMI Division of Revenue and Taxation (“CNMI DRT") and Guam's Department of Revenue and Taxation ("Guam DRT") process territorial income tax returns independently, on their own schedules, with their own resource constraints, and this year, their own distinct crises. Your federal refund and your territorial refund are separate checks issued by separate offices, and in the aftermath of Super Typhoon Sinlaku, the wait for both could unfortunately be significant.
The second most common question we have received since Part One ran is whether there is a formal process to demand faster action from either DRT, a form to file, or a legal mechanism to invoke. Unfortunately, neither territory has a formal expedited refund process available to ordinary taxpayers, and neither DRT is legally obligated to move your refund to the front of the line because of a disaster.
The deduction discussed below is the closest thing to a formal mechanism that territorial taxpayers actually have, which is why understanding it — and using it correctly — matters so much right now.
The Disaster Casualty Loss Deduction and H.R. 5366
Both the CNMI and Guam fully mirror the Internal Revenue Code, so the same federal casualty loss rules apply at the territorial level. Under current law, if your property was damaged or destroyed by Sinlaku and the loss was not fully reimbursed by insurance or FEMA, you can deduct the unreimbursed amount, but only if the total of all your itemized deductions exceeds your standard deduction.
For most territorial filers who take the standard deduction, that threshold is never crossed, and the deduction produces no benefit at all. For those who itemize, an additional hurdle applies: only the portion of your losses that exceeds 10 percent of your adjusted gross income is deductible. A taxpayer with $40,000 in AGI and $5,000 in storm losses would see only $1,000 of that loss become deductible after the floor. Even then, the deduction is subject to a $500-per-casualty floor before the 10-percent calculation begins.
One meaningful option already available under current law is the ability to elect to claim a 2026 Sinlaku loss on your 2025 return now rather than waiting to file a 2026 return next year, generating a refund during recovery rather than a year from now.
Further, H.R. 5366, the Doug LaMalfa Federal Disaster Tax Relief Certainty Act, would significantly change both of those limitations. The bill passed the U.S. House Ways and Means Committee 43-to-0 on March 25, 2026, and passed the House on April 27, 2026.
It makes two targeted expansions. First, it eliminates the 10-percent-of-AGI floor entirely; every dollar of unreimbursed loss above $500 per casualty becomes deductible. Second, it makes the deduction above-the-line, meaning it can be claimed in addition to the standard deduction rather than as a competing itemized deduction. A taxpayer who takes the standard deduction could still reduce their adjusted gross income by the full amount of their qualifying storm losses. For most filers in the territories, that second change is the more consequential of the two.
Does it apply to Sinlaku? It depends. For CNMI taxpayers, yes, and the answer is unusually clear. The bill covers disasters with a presidential major disaster declaration under the Stafford Act with an incident period beginning after July 4, 2025, and before January 1, 2027. Super Typhoon Sinlaku made landfall on April 14, 2026, well within that window. President Trump signed a major disaster declaration for the CNMI on April 24, 2026, thereby directly satisfying the Stafford Act requirement. Because the CNMI mirrors the Internal Revenue Code, the above-the-line treatment would also flow through to territorial returns.
For Guam taxpayers, the answer is more complicated. President Trump issued an emergency declaration for Guam on April 17, 2026, but an emergency declaration and a major disaster declaration are two distinct designations under the Stafford Act, and H.R. 5366 requires the latter.
As of the date of this publication, Guam has neither received nor requested a major disaster declaration for Sinlaku, which means Guam taxpayers do not currently qualify for the bill's expanded treatment. That could change. Guam's Governor can request a major disaster declaration, and if one is granted by President Trump, Guam filers would be brought within the bill's coverage retroactively to the incident period.
What still needs to happen. The bill now goes to the Senate, where companion bills remain pending in the Finance Committee. Given the strong bipartisan House vote and the Senate companion legislation already in place, passage is plausible. Still, the Senate has not yet scheduled a markup, and nothing is certain until the President signs it.
The CNMI Division of Revenue and Taxation
In our experience working with the CNMI DRT, processing delays are not a reflection of indifference or carelessness. They are a reflection of an agency that administers a full territorial tax system with staff and resources that would not support even a mid-sized county tax office on the mainland. The officers there know their taxpayers personally and provide a level of direct assistance the IRS rarely matches; the constraint is structural, not attitudinal.
Current delays appear to stem largely from chronic underfunding, a condition that predates Sinlaku and that the storm has only compounded. Even in an ordinary year, territorial refunds take months longer than federal ones, and after a catastrophic storm that disrupts operations, displaces staff, and generates a surge of disaster-related claims all at once, extended processing times are not just foreseeable; they are inevitable.
It is worth being clear about what the law does and does not require. Unfortunately, the CNMI DRT is under no obligation to expedite tax refunds due to a disaster. The automatic extensions covered in Part One, which pushed filing and payment deadlines back for Sinlaku-affected taxpayers, are separate and distinct from refund processing. An extension gives you more time to file; it unfortunately does not move your refund to the front of the line.
Outside of the casualty loss deduction, there is no formal mechanism available to compel faster processing of a territorial refund.
The Guam Department of Revenue and Taxation
Guam's situation this year has a different character. Guam DRT's tax and licensing system had been offline since its support contract expired on September 30, 2025, and was not renewed, halting income tax processing and refund issuance entirely until the system was restored, finally coming back online on April 2, 2026. Whatever the administrative cause, the practical effect for Guam taxpayers is that refunds have not been moving.
Guam's history on this front is considerably more documented and reflects delays caused by other issues entirely. For nearly two decades, taxpayers owed a refund by the Government of Guam faced uncertainty about the timing of their payment. While some taxpayers received prompt refunds without difficulty, others waited years. In April 2011, a group of Guam taxpayers filed a class action lawsuit, Paeste et al. v. Government of Guam, alleging that the Government had violated U.S. law by failing to pay refunds of territorial income tax overpayments promptly, and by running an expedited refund program so arbitrary and politically connected that it violated the constitutional guarantee of equal protection.
What the litigation revealed came as a shock to many taxpayers. According to the court filings, to receive an expedited refund, a taxpayer typically had to persuade a public official to add their name to a list, a process that rewarded personal and political connections rather than need or merit. DRT employees expedited their own refunds and those of their family and friends, often without submitting any of the required paperwork or even visiting the office.
The Government of Guam, confronted with meritorious and uncontested refund claims, simply did not pay them for years and instead used the withheld funds to fund government spending. The Ninth Circuit Court of Appeals, affirming the district court's ruling in Paeste v. Gov't of Guam, was direct about what that meant: the tax overpayments were never Guam's to begin with, the policy fell most heavily on taxpayers of limited means, and Guam's solution was outright illegal.
After losing both the class action lawsuit and the appeal, Guam fought the ruling all the way to the U.S. Supreme Court, which declined to hear the case.
It was only within weeks of losing at the Ninth Circuit, after years of litigation and with a federal court order in hand, that the former Governor announced the release of $54,500,000 in back refunds, with some refunds dating back to 1995 tax returns. Additionally, the Government of Guam was ordered to pay $1,697,615 to the law firms bringing the class action lawsuit, a figure that does not even account for the taxpayer dollars redirected to defend the withholding of refunds in the first place. None of what happened to Guam refund recipients over the years was their fault. The federal courts said so plainly.
As with the CNMI, Guam DRT is under no formal obligation to expedite your refund because of Sinlaku, and the filing extensions from Part One do not accelerate refund processing. With the Paeste injunction permanently in place, Guam DRT cannot offer prioritized processing to anyone, Sinlaku victims included. The federal courts characterized the injunction as the necessary and permanent remedy for decades of arbitrary treatment they found constitutionally infirm.
Do you need tax representation in the aftermath of Sinlaku? Call Azarvand Tax Law. We have boots on the ground not only in the Marianas but on the mainland as well, which means we can provide uninterrupted representation to our clients even when island operations are disrupted. Our Saipan team is available from 8 AM to 6 PM CHST, and our mainland team is also on standby from 10 PM to 8 AM CHST, giving us a combined 20 hours of daily availability to answer your questions on typhoon tax relief or anything else on your plate. Call or text us today at 410-698-4005, or send us an email at info@azarvandtaxlaw.com for a free 30-minute consultation.
This column is for general information and does not constitute legal or tax advice. The guidance referenced in this column is current as of the time of publication.
