Jim Simons (Jim Simons), one of the world's most successful investors and founder of hedge fund Renaissance Technology, has just experienced a rare defeat.

Under a settlement agreement between Renaissance Technology and the IRS, Simmons and several of his colleagues will pay back billions of dollars in taxes, interest, and fines to settle one of the biggest tax disputes in US history.

Renaissance CEO Peter Brown (Peter Brown) revealed the settlement agreement in a letter to investors on Thursday. Although the letter did not disclose the specific settlement amount, US Senate investigators determined in 2014 that the case had unpaid taxes before interest and fines were not included in the case was as high as 6.8 billion US dollars.

The IRS has long believed that Renaissance misrepresented the profits of its flagship fund, Medallion, and used a complex option arrangement to turn short-term capital gains into long-term gains, with lower tax rates.

Medallion is one of the best performing funds in history, with an annualized return of around 40% since its inception in 1988. The fund is almost entirely owned by current and former Renaissance employees. Funds open to the outside world, such as Renaissance institutional stock funds, are not within the scope of this tax dispute.

Under the terms of the agreement, Simmons and six other current and former Renaissance board members will pay 100% additional tax if they describe the gains as short-term capital gains, as required by the IRS.

These include Renaissance CEO Brown, and former CEO Robert Mercer (Robert Mercer), a famous conservative political donor and an important supporter of former US President Trump. Renaissance board members will also pay interest and fines, the exact amount of which is unknown.

Other Medallion investors will pay 80% additional tax and interest on short-term capital gains.

Additionally, Simmons paid an additional $670 million to the IRS to settle another issue discovered by the IRS in the Renaissance options arrangement involving dividend withholding taxes.

Brown wrote in the letter that the Renaissance board chose a settlement “rather than risk that the lawsuit could lead to worse results, including harsher terms and penalties.” He said the company spent years dealing with the IRS Office of Appeals. If the taxpayer is unable to reach a resolution there, the dispute usually moves to the US tax court or other federal court.