A Florida resident has admitted guilt in a federal court in Miami for failing to pay employment taxes and neglecting to file individual income tax returns. Paul Walczak, from Palm Beach Gardens, managed a network of healthcare companies under names like Palm Health Partners and Palm Health Partners Employment Services (PHPES). At its height, PHPES employed over 600 individuals with an annual payroll exceeding $24 million.
Court documents reveal that between 2016 and 2019, Walczak withheld nearly $7.5 million in employee taxes but did not remit these funds to the IRS as mandated by law. This occurred despite previous penalties imposed by the IRS in 2014 for similar offenses. Additionally, during this period, Walczak failed to pay $3,480,111 owed for his business's share of Social Security and Medicare taxes.
While withholding these taxes, Walczak diverted over $1 million from his businesses' accounts to buy a yacht and transferred substantial sums to his personal accounts. He also used business funds for personal expenses at high-end retailers such as Bergdorf Goodman, Cartier, and Saks Fifth Avenue.
Walczak did not submit personal income tax returns from 2019 through 2020 despite legal obligations. His actions resulted in a total tax loss of $10,912,334.80 to the IRS.
Sentencing is set for February 28, 2025. Walczak faces up to five years imprisonment for the employment tax violation and one year for failing to file income tax returns. Additional consequences may include supervised release, restitution, and financial penalties. The final sentence will be determined by a federal district court judge after evaluating U.S. Sentencing Guidelines alongside other statutory factors.
The announcement was made by Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division.
The investigation is being conducted by IRS Criminal Investigation.
Trial Attorneys Andrew Ascencio, Brian Flanagan, and Ashley Stein from the Justice Department’s Tax Division are handling the prosecution.