Robert Mercer, James Simons, other Renaissance hedge fund executives agree to $7 billion tax payment

James Simons
(Image credit: Tim Sloan/AFP/Getty Images)

A group of current and former executives at pioneering hedge fund Renaissance Technologies have agreed to pay up to $7 billion in back taxes, interest, and penalties, the company told investors Thursday. The settlement ends a long dispute with the Internal Revenue Service over how some Renaissance funds booked short-term gains for tax purposes. It is one of the biggest tax settlement in U.S. history, if not the largest, The Wall Street Journal reports.

Among those paying the IRS are Renaissance founder James Simons, a mathematician and former code-breaker who used algorithms to find and exploit lucrative short-term patterns in financial markets, and former co-CEO Robert Mercer. Simons will make an additional "settlement payment" of $670 million on top of his back taxes. The settlement covers tax payments from the firm's hugely successful Medallion fund between 2005 and 2015, when the IRS changed its reporting rules. Because Medallion only invests the money of employees, their families, and select friends, outside investors aren't involved in the settlement, the Journal says.

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