Bessent Settles I.R.S. Tax Dispute Over 3.8% Medicare Levy After $910,000 Challenge
Updated
Updated · The New York Times · Sep 30
Bessent Settles I.R.S. Tax Dispute Over 3.8% Medicare Levy After $910,000 Challenge
3 articles · Updated · The New York Times · Sep 30
Summary
Scott Bessent settled this summer an I.R.S. dispute over a hedge-fund tax strategy that had let him avoid Medicare taxes, though the timing and any additional payment remain unclear.
The fight centered on a 3.8% Medicare levy that Wall Street managers sought to sidestep by routing income through limited partnerships and classifying much of it as exempt business earnings.
Senate Democrats had said before Bessent’s confirmation that the maneuver helped him avoid $910,000 over three years; Bessent disputed that figure but said he would reserve money in case the I.R.S. prevailed.
Earlier this month, the Second Circuit upheld the Tax Court’s backing of the I.R.S. position, prompting Democrats led by Ron Wyden to press Bessent on whether he would now pay the avoided tax.
The settlement closes Bessent’s personal dispute even as the I.R.S., weakened by auditor losses and the abandonment of Biden-era rulemaking, is in a weaker position to police the strategy broadly.