Treasury Secretary Scott Bessent this summer settled a dispute over a tax strategy he used as a hedge fund manager to avoid paying thousands in taxes, according to a person familiar with the matter. Before joining President Trump’s cabinet, Mr. Bessent relied on a maneuver common on Wall Street that allowed him to avoid paying the 3.8 percent tax that funds Medicare. The strategy involved channeling earnings through a limited partnership and designating much of the income as business earnings exempt from the Medicare tax.
For years, the I.R.S. has argued that people like Mr. Bessent owe the Medicare tax on all income earned at their funds. Ahead of his confirmation hearing last year, Senate Democrats prepared a memorandum showing Mr. Bessent was able to avoid paying $910,000 in taxes over three years. At the hearing, Mr. Bessent disputed that amount but said he would set aside a fund to potentially pay the taxes depending on court challenges.
The U.S. Tax Court had sided with the I.R.S. after a hedge fund challenged its crackdown on the tax strategy. Earlier this month, the Second Circuit upheld the Tax Court decision. On Wednesday, Senate Democrats led by Senator Ron Wyden of Oregon sent Mr. Bessent a letter asking if he would adhere to the ruling. It is unclear when exactly Mr. Bessent settled the issue or how much additional tax he paid.
Sursa: New York Times Business · Rezumat de HeadlinesBriefing