Ex-IRS Supervisor, Wife Plead Guilty in Tax Evasion Case

A former supervisor with the Internal Revenue Service and his wife have pleaded guilty to felony charges of lying to IRS agents to avoid paying capital gains taxes on the sale of their home.

Thomas J. DiMuzio, 51, and Kathleen DiMuzio, 46, formerly of San Juan Capistrano, admitted to U.S. District Judge Gary L. Taylor on March 28 that they conspired to defraud the federal government and obstructed a federal tax audit. Thomas DiMuzio also pleaded guilty to one count of lying to an IRS auditor while employed as an IRS supervisor.

The case was heard in federal court in Los Angeles.

The charges against the couple stemmed from an IRS audit of their 1989 and 1990 federal income tax returns, said Assistant U.S. Atty. Marc S. Harris. The DiMuzios sold their home in Laguna Hills in August 1987, and then, to avoid capital gains taxes, lied to IRS agents about when they moved into a new home in San Juan Capistrano, Harris said.

Federal law stipulates that anyone who sells a home has two years to reinvest in another home or pay capital gains taxes on the sale, Harris said. The DiMuzios went over the time limit but then failed to report it accurately, he said.

“They made various false and misleading statements about the move-in date, submitted false documents and encouraged others, including relatives, to submit documents to convince the auditor of the earlier move-in date,” Harris said.

The potential penalty is five years in jail and a fine for each count, Harris said. Taylor set sentencing for June 24.

James M. Kamman, Kathleen DiMuzio’s Irvine-based attorney, said there was little else the couple could do but plead guilty.

“It’s a very unfortunate situation for both of them,” said Kamman, noting that the DiMuzios have relocated to an undisclosed South County community. “Tom received numerous awards for outstanding service and other things while a federal employee.”

Nonetheless, Thomas DiMuzio’s 22-year career with the IRS, where he was the supervisor of a tax collection division in the Laguna Niguel office, is over. He resigned from his post in 1993, but conviction of these crimes would have meant termination, said Judith A. Golden, an IRS spokeswoman.