Define the term “alter-ego”

The case that I researched that involves “alter-ego” liability is “RESILIENT FLOOR COVERING PENSION FUND v. INSTALLATION INC.”. This case involves a non-union employer by the name of Simas Floor Co., Inc., who decided to create another business called M & M Installation, Inc, which is a union employer. The role of M &M Installation, Inc, is to take care of all of the union flooring work. Simas Floor Co., Inc., is “a non-union residential and commercial flooring contractor with offices in three cities. It is owned in equal shares by three cousins, Mark Simas, Michelle Simas Carli, and Craig Simas” (United States Ninth Circuit case, 2010).  And then in June 1994, Mark Simas founded M & M Installation, Inc, to be the main supplier for Simas Floor Co., Inc for its residential flooring and tile projects. Which means that Simas Floor which is a non-union employer is going to be able to go for union jobs, such as subletting the service and everything to M & M. In the end, “the district court granted summary judgment to the Pension Fund, holding that Simas Floor was M & M`s alter ego because the two companies admittedly had sufficient commonality” (United States Ninth Circuit case, 2010).

 

Often at times, the main reason why businesses are formed to be a corporation or LLC is so that the full responsibility such like debts does not fall on one person alone. However, courts can still push those responsibilities on the owners and shareholders no matter how little involvement you are in the business. The elements the court considered when determining whether to pierce the corporate shield includes, the court can say that the LLC is fake “a court could find that the corporation is really just a sham (the owners` alter ego) and that the owners are personally operating the business as if the corporation didn`t exist” (NOLO, n.d.), the court can accuse the business of embezzlement especially when one or more of the owner borrowed money to start a business and then lost all of the investment.

 

I believe that it is much more important for corporations to pay taxes to government. The reason being, it is the tax payer’s money that the government has been using to develop our infrastructure that each of the shareholders have been enjoying. As long as any of the parents of the shareholders is from America, the shareholders have to pay taxes. It is the taxes that have helped to help to build up America`s education, <gs>healthcare system, etc.

 

And no, I do not believe that it is ethical for a company to move its corporate headquarters overseas to avoid paying income tax, unless every shareholder that <gs>is an America is going to renounce his/her citizenship and move the whole family overseas also.