Mets owner Steve Cohen balks at IRS tax assessment

New York Mets owner and hedge fund titan Steve Cohen is fighting an Internal Revenue Service bid to force him and other money managers to pay additional self-employment taxes on income from years ago.

Cohen, the 67-year-old billionaire owner of the Stamford, Conn.-based firm Point72 Asset Management, is disputing an IRS interpretation of a 70-year-old law that governs whether limited partnerships are exempt from paying self employment tax on business profits.

The IRS — as part of what Bloomberg called a “campaign targeting hundreds of US money managers” — wants Cohen to fork over somewhere between $7 million and $10 million in additional levies on income generated by his hedge fund in 2015 and 2016, according to Bloomberg.

Cohen, whose net worth is valued by Bloomberg Billionaires Index at $13.2 billion, was a limited partner of his firm in 2015 and 2016.

According to Bloomberg, Cohen has already paid taxes on the $344 million in total earnings during those two years.

“Since it’s an ongoing charge year after year after year, it will be a meaningful drain” for money managers, Anthony Daddino, a managing partner at law firm Meadows Collier, told Bloomberg.

Self-employment tax charges businesses a 15.3% levy — of which 12.4% goes to Social Security while 2.9% is for Medicare.

In 2018, the IRS launched a campaign to scrutinize businesses over whether they qualified as “limited partnerships” that were thus exempt from self-employment tax.

The agency has claimed that in recent years a greater number of limited partners have gone beyond the scope of their titles by providing services to the business in which they invested — thus putting them on the hook for self-employment taxes on profits.

But money managers have claimed that self-employment tax as defined in the statute only pertains to guaranteed payments, such as salaries, rather than earnings or profit.

Other asset managers such as Soroban Capital Partners have also contested the IRS claims.

Point72 and the IRS declined to comment.

Point72 generated more than $2.4 billion in profits for investors last year.

Cohen himself pocketed $1.7 billion in personal capital gains, according to Institutional Investor.