Treasury Secretary Scott Bessent settled a self-employment tax issue with the federal government this summer, according to a person familiar with the matter.

Bessent, a former hedge-fund manager who now oversees the Internal Revenue Service, had used a technique employed by many in the industry to avoid paying the 3.8% portion of the self-employment tax that helps fund Medicare. Fund managers had argued that limited partners didn't have to pay the tax, taking a position the IRS has been challenging since the first Trump administration.

During his confirmation hearing last year, Bessent disputed Democrats' assertion that more than $900,000 was at stake. He told lawmakers that he was setting up a reserve fund to deal with the potential tax cost and would respect judicial decisions.

Earlier this month, an appeals court ruled in favor of the government in a case involving hedge fund Soroban Capital.

Senate Democrats had been pressing Bessent to pay any taxes he owed from his time at Key Square Group.

"Your avoidance and delay tactics have already cost the Medicare trust fund hundreds of thousands of dollars," Sen. Ron Wyden (D., Ore.) and others wrote in a letter to Bessent last week that they publicized on Wednesday.