Estate has unpaid taxes and potential lawsuit.

[LdiJ]

Is there some reason you pay to the IRS when the other Guam residents (barring some unusual situation) pay their taxes to the Guam government?

They do pay federal social security and medicare taxes, to the IRS, so that may be where the confusion lies. There is also the possibility that his father was not living on Guam when the debt was incurred.

 

[justalayman]

They do pay federal social security and medicare taxes, to the IRS, so that may be where the confusion lies. There is also the possibility that his father was not living on Guam when the debt was incurred.

Could be.

 

[Taxing Matters]

Is there some reason you pay to the IRS when the other Guam residents (barring some unusual situation) pay their taxes to the Guam government?

There are lots of possibilities. The rules for residents of possessions under IRC § 937 and the much more detailed Treasury regulations get a bit complex. For example, even for residents of the possessions, if they have U.S. source income (which in this context means it is income from the U.S. but outside the possession) they may have to file a U.S. federal income tax return.

 

[justalayman]

There are lots of possibilities. The rules for residents of possessions under IRC § 937 and the much more detailed Treasury regulations get a bit complex. For example, even for residents of the possessions, if they have U.S. source income (which in this context means it is income from the U.S. but outside the possession) they may have to file a U.S. federal income tax return.

Ok, I’ll bite;

So why does the op pay federal tax to the irs?

 

[Taxing Matters]

Ok, I’ll bite;

So why does the op pay federal tax to the irs?

I only mention that there are various possibilities why someone living in Guam would pay income tax to the feds. I cannot say why the OP's parents (and it is the parents' situation that is at issue here, not the OP's) specifically paid income tax to the feds without knowing the details of their situation.

 

[justalayman]

I only mention that there are various possibilities why someone living in Guam would pay income tax to the feds. I cannot say why the OP's parents (and it is the parents' situation that is at issue here, not the OP's) specifically paid income tax to the feds without knowing the details of their situation.

Exactly my point.

When a person says they pay tax to the irs as a general statement when in general people in Guam don’t pay federal taxes to the irs, to me, it sounds like there may be a misunderstanding of who is involved. His other statements also seemed to bring in the irs when it could be the same misstatement. If you reread the first post op seems to toss out irs without any reason the irs would be involved.

 

[Taxing Matters]

Exactly my point.

When a person says they pay tax to the irs as a general statement when in general people in Guam don’t pay federal taxes to the irs, to me, it sounds like there may be a misunderstanding of who is involved. His other statements also seemed to bring in the irs when it could be the same misstatement. If you reread the first post op seems to toss out irs without any reason the irs would be involved.

Yet the OP does say that his parents have a tax obligation owed to the IRS in nearly the amount of the expected award. While the OP might be mistaken on that, that's a fairly specific statement and suggests there is indeed a federal tax obligation that they owe. All we can go by is what the OP tells us. And since it is not impossible that they do indeed have such a liability I addressed that situation.