Trump Goons’ Jaw-Dropping Tax Dodge Scheme Exposed

President Donald Trump’s tax chief and his Medicare administrator both took advantage of a tax dodge to avoid paying hundreds of thousands of dollars in Medicare taxes.

Treasury Secretary Scott Bessent, who also serves as acting commissioner for the Internal Revenue Service, and Dr. Mehmet Oz, the Administrator for the Centers for Medicare and Medicaid Services, both claimed they were limited partners of their respective companies and therefore not subject to self-employment tax.

Bessent used a limited partnership structure at his hedge fund, Key Square Capital Management, to avoid paying about $910,000 in Medicare taxes on money he made running the fund between 2021 and 2023, The New York Times reported.

Oz, meanwhile, avoided paying $440,000 worth of Social Security and Medicare tax on income he made between 2021 and 2023 from Oz Property Holdings LLC, which houses Oz Media LLC, Bloomberg reported earlier this year.

Dr. Oz told Medicaid recipients to stop eating carrot cake. — CMS Administrator Dr. Oz avoided paying $440,000 worth of Social Security and Medicare tax between 2021 and 2023. John Lamparski/Getty Images

The IRS has long taken the position that owners and active members of limited-liability corporations and partnerships are not really limited partners, even if they call themselves that, according to the Tax Law Center.

Only passive investors are considered limited partners who are exempt from paying self-employment tax, according to rulings from the federal U.S. Tax Court.

In 2023, a Tax Court judge sided with the IRS’ interpretation and held that owners of limited partnerships, like Bessent’s hedge fund, are not exempt if they work for the firm and run it full time.

Instead of following the ruling and paying Medicare tax, the Treasury secretary has said he would wait to see how the appellate process plays out. The case is still pending before the 5th Circuit Court of Appeals.

“What surprises me is that there’s a precedential Tax Court opinion that Scott Bessent seems to say, ‘That’s not good enough for me,’” University of Florida Law professor Karen Burke told the Times.

Another law professor from the University of Baltimore School of Law said there was “zero question” that it was “abusive” for owners of limited partnerships to avoid paying self-employment tax.

“No one of good faith would argue otherwise,” Walter D. Schwidetzky told the Times.

The Justice Department is technically still defending the IRS’ original interpretation in court.

But since Bessent took office, the Treasury has backed away from regulating limited partnerships, and the IRS has far less enforcement manpower than it did a year ago, according to the Times.

Under former President Joe Biden, collecting more self-employment taxes from owners of limited partnerships was listed as an official priority on the Treasury’s Priority Guidance Plan, but now it no longer appears on the PGP.

Treasury Secretary Scott Bessent listens as U.S. President Donald Trump in the Cabinet Room at the White House on April 24, 2025 in Washington, DC. — A Treasury spokesperson said Scott Bessent was not involved in developing his department’s new priority guidance plan. Chip Somodevilla/Getty Images

A Treasury spokesperson told the Times that Bessent was “not involved in developing the P.G.P. and played no role in the decision to remove the limited partner exception from the guidance list.”

Collecting those taxes would raise an estimated $250 billion in revenue over the next 10 years, according to a Democratic proposal to impose a parallel, equivalent tax.

And yet even if the appellate courts ultimately uphold the IRS’ interpretation of the law, it will be difficult for the IRS to enforce the rules.

The Trump administration has laid off or forced out nearly one-quarter of the agency’s workforce, including many late-career hires who were experts in unraveling the complex corporate structures of hedge funds, according to the Times.

The Daily Beast has reached out to Bessent’s IRS and Oz’s CMS for comment.

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