RE: Signing the Return with this Tax Position
I believe that the use of the strategic process set to facilitate transparent transfer prices as well as other patriotic activities is vital not only to fasten the process, but also prevent ill suspicion. This memo enlightens about the importance of evaluating the law in order to align actions to the requirements set for the transfer pricing. It informs about issues avoids through using processes and documents to prove the transparency of organizational transfers as well as preventing fines and penalties.
I would only sign the return if the tax position was included. Surpassing the tax is not only a risky position for the client, but also an ill-advised strategy to operate as a patriot in a nation. The first and most fundamental point-of-view should show that that each organization and person has roles to play to his/her/its nation as a patriotic component. 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).
An obscured activity within business operation can haunt staff proper functioning since they will have to omit some details during audit (Shaw 265). This step would be taken to prevent media glares in cases an issue is noted. A 25 to 35 percent chance of IRS assessment is a transfer pricing manipulation in respect to the handling of side problems of lacking 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 for US taxation.
On a tax of $150000, the cost being applied for the overall cost implemented for the free market relating 2 unrelated products as well as the additional tax may present a small different 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 form the formation reforms a strategic way in which 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 by be subject to huge penalties and fines that affect actual income of the organization.
Essentially, it is important and paramount to hand 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 it 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.
