Partners of private equity firm Blackstone Group may have devised a way to avoid paying tax on $3.7 billion raised largely in the firm's initial public offering last month, the New York Times reported on Friday.

Blackstone partners may recoup $553 million in tax payments, and some $200 million more over the long term, the Times reported, without explaining how it arrived at those calculations.

Congress is currently weighing whether to raise taxes on the profits made by private equity and hedge fund firms, which would more than double the tax rate from 15 to 35 percent.

The Times said Blackstone's tax move hinged on its use of goodwill, an accounting term for the value of the intangible assets built up by a company over time.

Under the plan, partners paid a 15 percent capital gains rate on the shares they sold last month in the IPO, the Times said. However, Blackstone then arranged to get deductions for itself for $3.7 billion worth of goodwill at a 35 percent rate, in deductions that must be spread out over 15 years.

The Times said a spokesman told the newspaper its analysis of the tax implications was totally flawed.

Blackstone spokesman John Ford told Reuters he had no comment on the matter.

Other private equity and hedge fund firms that have already gone public, or plan to, make use of similar techniques, the Times said.

Fortress Investment Group, which went public in February, uses a form of this tax structure, according to the New York Times.

And private equity pioneer Kohlberg Kravis Roberts and hedge fund firm Och-Ziff Capital Management LLC describe similar tax strategies in preliminary prospectuses, the Times said. All three declined to comment, it added.