A former IRS district director who worked for a company that promised to reduce the tax liabilities of home-based business owners has been sentenced to two years in prison.

Jesse Ayala Cota, 68, pleaded guilty in April 2007 to one count of conspiracy to defraud the IRS (see Former IRS District Director Pleads Guilty to Tax Fraud). In his plea, he admitted advising taxpayers how to defraud the U.S. government.

During 33 years as an employee of the Internal Revenue Service, Cota worked as a revenue agent, audit-training coordinator, large-case examination manager, assistant service center director, assistant district director and district director. After retiring, he went to work in July 1999 for Renaissance, the Tax People Inc., a Topeka-based company that sold tax services to home-based businesses. Cota was accused of defrauding the U.S. government of more than $1.3 million and earning more than $300,000 while working for Renaissance.

Owners of home-based businesses who paid to become members of Renaissance received services including tax preparation, tax advice and so-called “audit protection.” The “Tax Advantage System” offered by Renaissance was based on claims that business owners could legally reduce the taxes they paid by converting their personal expenses into business deductions. Cota and other defendants assured Renaissance clients that the tax reduction methods were legal, even though the tax returns filed using Renaissance’s methods were based on providing fraudulent information to the IRS.

The IRS has been aggressively pursuing Renaissance and related cases. Cota’s co-defendants include Renaissance founder and president Michael Craig Cooper, who is set for sentencing Nov. 18, and vice president Todd Eugene Strand, who is set for sentencing Sept. 28. Thomas Steelman, another former long-time IRS employee, was sentenced to 46 months in federal prison on Aug. 10, 2009. Several tax preparers associated with Renaissance have also been sentenced to prison or probation.

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