David Hryck, a tax lawyer for celebrities and billionaire businessmen, is concerned about the IRS’s recent efforts to crack down on international tax evaders.
“In many cases, from what I’ve seen so far, they’ve had numerous voluntary compliance programs, but it seems like the innocent people are getting penalized,” he said. “They might have somebody whose mother or grandmother is not a U.S. resident, and if the children happened to be a U.S. resident or citizen, they had no idea this account existed. Unfortunately those are many of the cases I see.”
Hryck was recently named U.S. head of international tax for the law firm SNR Denton. He also executes deals for multinational corporate tax restructuring and estate planing for individuals. Hryck declined to confirm which celebrities he has for clients, but he acknowledged that he is on the board of directors of the Amy Winehouse Foundation, and a board member of the Happy Hearts Fund, founded by supermodel Petra Nemcova. He is also a World Fellow of the Duke of Edinburgh's Award for Excellence Fund, founded by Prince Philip, the Duke of Edinburgh.
Hryck also serves as a U.S. member of the Duke's Business Advisory Group, headed by Prince Edward, the Earl of Wessex. In addition, he is a board member of the Lifeline Humanitarian Organization, founded by Crown Prince Alexander and Crown Princess Katherine of Yugoslavia.
“You have a person who has never, or in a long time, set foot in the United States, and was born in Europe or Asia and have all their accounts outside the United States,” he said. “They have no connection to the U.S. besides having a passport, even though they are American for all intents and purposes. Those kinds of people are really getting penalized by the program. They find out about it, they want to comply, and do the right thing, even though the right thing involves penalties and interest. There are people who with criminal intent are hiding their money offshore, and they’re in essentially the same position as people who have been innocent. It puts everybody on the same playing field.”
Hryck acknowledged that he has been involved in a number of cases where clients became aware of the various Offshore Voluntary Disclosure Programs offered by the IRS in recent years, including some who are well known. “There are plenty of folks who are high-profile names,” he said. “But they’re just like everyone else. They fall into similar lifestyles.”
Hryck would like the U.S. to do more about the tax rates in its corporate tax system, which he believes discourages investment in companies here.
“Our tax rates in the U.S. are materially higher than most of the rest of the world and Western and Eastern Europe,” he said. “Companies are encouraged to do business offshore to take advantage of some of the lower tax rates. It’s important to have some kind of a program to allow companies to repatriate their earnings with some kind of tax break. It would be in everyone's best interest to come up with some kind of a stimulus plan to get more of that back to the U.S. In addition to lowering U.S. tax rates, it would encourage more jobs and investment.”
Hryck counts both international companies and international celebrities among his tax clients, although he declined to divulge their names. “They’re individual clients like any others,” he said. “If they’re doing business around the world like licensing or appearances or performances, those all create international issues and for all different kinds of people. If they’re licensing a product or their name in different countries, the idea is to reduce the withholding taxes on royalties and to try to set up fixed structures. If the business is being done outside the U.S. at a lower tax rate, international tax planning presents opportunities to save taxes, largely because of the ability to defer profits.”