A Florida man was sentenced to 18 months in prison, two years of supervised release, and ordered to pay $4,381,265.76 in restitution to the United States for willfully failing to pay over employment taxes and willfully failing to file individual income tax returns. According to court documents and statements made in court, Paul Walczak controlled a network of interconnected healthcare companies operating under various names, including Palm Health Partners. Through another of his entities, Palm Health Partners Employment Services (PHPES), Walczak employed over 600 people and paid over $24 million annually in payroll. As such, Walczak was required to withhold Social Security, Medicare, and federal income taxes from his employees’ paychecks and to pay those monies over to the IRS each quarter, and to pay the companies’ portion of Social Security and Medicare taxes. For more than a decade, Walczak was not compliant with his tax obligations and instead used the withheld taxes to enrich himself.
From 2016 through 2019, Walczak withheld $7,432,223.80 of taxes from his employees’ paychecks, but did not pay those taxes over to the IRS. While Walczak was withholding taxes from the pay of his employees under the pretext of paying these funds to the IRS, he used over $1 million from his businesses’ bank accounts to purchase a yacht, transferred hundreds of thousands of dollars to his personal bank accounts, and used the business accounts for personal purchases at retailers such as Bergdorf Goodman, Cartier, and Saks. During this same time, he also did not pay $3,480,111 of his business’s portion of his employees’ Social Security and Medicare taxes. In total, Walczak caused a tax loss to the IRS of $10,912,334.80.
