A Florida resident, Paul Walczak, received an 18-month prison sentence for tax-related offenses. He was also sentenced to two years of supervised release and ordered to pay $4,381,265.76 in restitution for failing to pay employment taxes and refraining from filing personal income tax returns.
Court documents and statements revealed that Walczak managed a network of healthcare businesses known as Palm Health Partners. Through Palm Health Partners Employment Services (PHPES), he employed over 600 individuals and managed an annual payroll exceeding $24 million. Walczak was supposed to deduct Social Security, Medicare, and federal income taxes from employee wages and remit them quarterly to the IRS. He was also required to pay the company’s share of Social Security and Medicare taxes.
However, for over a decade, Walczak did not fulfill these obligations. Instead of paying the taxes, he utilized these funds for personal enrichment. In 2011, he failed to remit withheld taxes for two quarters. The IRS began collection actions in 2012, sending notices and meeting with him to ensure compliance. This effort was unsuccessful, leading the IRS to assess the unpaid taxes against him in 2014. Although he initially complied and paid the assessments in October 2014, his compliance was short-lived. By the end of 2015, he resumed withholding taxes without remittance.
Between 2016 and 2019, Walczak withheld $7,432,223.80 in employee taxes but did not pay these to the IRS. His misuse included purchasing a yacht with over $1 million from business accounts and transferring large sums to personal accounts. He also made purchases at high-end retailers. Additionally, he did not remit $3,480,111 of the business’s share of employee Social Security and Medicare taxes.
By 2019, the IRS had imposed civil penalties against Walczak totaling millions of dollars. He also stopped filing personal tax returns from the 2018 tax year, despite earning a $360,000 salary from PHPES and receiving $450,000 in business account transfers.
In 2019, Walczak established a new company named NextEra, fronted by a family member as the nominal owner, while he retained financial and operational control. Through NextEra, Walczak made several transfers and payments using business funds for personal expenses.
The total tax loss caused by Walczak to the IRS was calculated at $10,912,334.80.
The case was announced by U.S. Attorney Hayden P. O’Byrne for the Southern District of Florida, Acting Deputy Assistant Attorney Karen E. Kelly of the Justice Department’s Tax Division, and Special Agent in Charge Emmanuel Gomez of the IRS Criminal Investigation Miami Field Office.
The IRS-CI led the investigation. Prosecution was managed by Assistant United States Attorney Andres E. Chinchilla and Trial Attorneys Brian Flanagan, Andrew Ascencio, and Ashley Stein of the Justice Department’s Tax Division.
Further details are available on the District Court for the Southern District of Florida’s website or the PACER service under case number 23-cr-80024.