Monarch Alternative Capital Takes IRS to Court Over Tax Bill

Real estate fund Monarch Alternative Capital LP says the government is unfairly increasing its income subject to employment taxes by nearly $109 million.

Monarch’s general partner, MDRA GP LP, itself has four limited partners, including co-CEOS Michael Weinstock and Christopher Santana, and vice chairman Andrew Herenstein, plus an LLC. The IRS increased MDRA’s net earnings subject to Self-Employment Contributions Act taxes—namely Social Security and Medicare—by $7.7 million and $101.2 million respectively for 2016 and 2017.

The IRS incorrectly determined MDRA’s limited partners didn’t qualify for an exclusion for the years at issue, according to the petition filed Sept. 19.

There ...