RE: Signing the Return with this Tax Position
Purpose
I believe that following procedures to approve business issues is vital in order to prevent problems and loss of reputation. The purpose of this memo is to evaluate the ethic involving whether I would sign returns containing tax return position. This memo enlightens about the importance of evaluating the law in order to determine whether actions are ethical and legal as per standard government requirements set for the transfer pricing. It informs about the issues of using processes and documents to prove the transparency of organizational transfers as well as preventing fines and penalties in connection with the organizational ethic quo.
Ethical Dilemma
The position taken by an entity while trying to shift income along the jurisdiction of taxes where they are classified as exempted transactions in the tax files are termed as tax positions. Such positions add to the organizational income since the money meant for legal purposes are shifted unethically or illegally to other activities within a company. I would sign the tax returns inclusive the tax position since avoiding is not only risky for the client, but also an ill-advised strategy to operate as a patriot. The first and most fundamental point-of-view should show that each organization and person has roles to play to his/her/its nation as a patriotic entity. Tax evasion in whatsoever justifiable manner deprives the capabilities of a holistic national growth (Rothbard 143). Secondly, an organization should not take a risk of its income due to probable fines and reputation if identified within the process of evasion. The US imposition of accuracy-related penalty of the code 6662 and 6694 of the IRC argues about the penalties associated to professional negligence of different forms including the misstatement, understatement, overstatement, and tax valuations ("U.S. Code: Table of Contents" par. 1).
Facts and Circumstances
An obscured activity within business operation can haunt proper functioning of staff since they have to omit some details during audit (Shaw 265). This step would be taken to prevent media glares in case an issue is noted. A 25 to 35 percent chance of IRS assessment is a transfer pricing manipulation to handle side problems without any apparent income rate associated to the Cayman Island subsidiary. In this regard, the involvement of the 2 unrelated parties makes the exercise illegal according to the right codes established by US tax control.
Problem Solving
On a tax of $150000, the cost being applied for the overall cost implemented for the free market involving 2 unrelated products as well as the additional tax may present a small difference that is not worth such a risk. The ‘Arm’s Length’ is set to develop a system of recording the prices in order to prevent the presentation of unique and different information since the process does not take place in the actual procedure. The taxation laws create the formation reforms strategically where tactics for accounting must align in the books. If the documentation does not take place in the right time, then the evaluation may happen by chance and fail the process. If the process of tax evasion does not take place in the planned manner, then the company may be subject to huge penalties and fines that affect the actual income of the organization.
Recommendation
Essentially, it is important and paramount to handle tax properly and pay whenever necessary in order to prevent losses. The proper channeling of tax does not only assist the company to operate freely and without any subject fears when the assessment happens. In fact, there is no money set aside if such occurrences happen unexpectedly. This implies that the money can be used to perform other chores within the company instead of wasting and storing it.
Works Cited
"U.S. Code: Table of Contents." 2015. Web. 24 Jan. 2016. <https://www.law.cornell.edu/uscode/text>.
Rothbard, Murray N. For a New Liberty. New York: Macmillan, 1973. Print.
Shaw, William H. Business Ethics. Boston, MA: Wadsworth/Cengage Learning, 2011. Print.
