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HomeCRIME & PUNISHMENTSENTENCE & FINEOwner of Florida's Palm Health Partners Employment Services Paul Walczak Sentenced to...

Owner of Florida’s Palm Health Partners Employment Services Paul Walczak Sentenced to Prison for Employment Tax Crimes

A Florida man has been sentenced to 18 months in prison and 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 health care companies operating under various names, including Palm Health Partners.

Through another of his entities, Palm Health Partners Employment Services, 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 over a decade, Walczak was not compliant with his tax obligations and instead used the withheld taxes to enrich himself. In 2011, Walczak did not pay the IRS two quarters of withheld taxes. In 2012, the IRS began collection efforts, including sending him notices about his unpaid taxes and meeting with him to help bring him into compliance.

When that effort was unsuccessful, the IRS personally assessed the outstanding taxes against him. After that was imposed, Walczak paid the assessments in October 2014. However, Walczak’s compliance did not last long.

By the end of the following year, Walczak was again withholding taxes from his employees’ paychecks and keeping the money.

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 did not pay $3,480,111 of his business’s portion of his employees’ Social Security and Medicare taxes.

By 2019, the IRS had assessed millions of dollars in civil penalties against Walczak. Beginning with the 2018 tax year, Walczak also stopped filing personal income tax returns despite that he was still receiving income, including a $360,000 salary from PHPES and $450,000 in transfers from his business bank accounts.

Moreover, in 2019, Walczak created a new business, NextEra. Walczak used a family member as the 99 per cent nominal owner of NextEra, but Walczak had ultimate control of the finances and operations of NextEra.

Through NextEra, Walczak transferred in 2020 just under $200,000 to a bank account titled in a family member’s name, over $250,000 to a bank account in his wife’s name, and over $800,000 in payments directly to third parties for Walczak’s personal expenses, including clothing stores, department stores, and fishing retailers.

In total, Walczak caused a tax loss to the IRS of $10,912,334.80.

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