Monday, August 31, 2009

An Ex-IRS District Director Gets 2 Years for Defrauding the IRS

Ex IRS Employees get in trouble, too. The IRS and the U.S. government do not discriminate. Recently, Jesse Ayala Cota, 68, former IRS District Director, was sentenced to 2 years in prison after pleading guilty to one count of conspiracy to defraud the IRS.

Jesse Ayala Cota worked 33 years at the IRS as a revenue agent, audit-training coordinator, large-case examination manager, assistant service center director, assistant district director and district director. After all of these lofty positions, he knows the rules. Yet he still thought he could get away with breaking them. Bad move.

After Cota quit the IRS, he went to work with Renaissance, the Tax People Inc., It was here were Cota went on to defraud the U.S. government of more than $1.3 million while earning more than $300,000 working with the company.

Jesse Ayala Cota used the same old IRS scams. He ran a service that helped home-based businesses who paid to become "members". The services provided included tax preparation, tax advice, and so-called "audit protection".

The "Tax Advantage System" offered by his company was based on fraudulent claims that business owners could legally reduce their tax liability by converting their personal expenses into business deductions. Jess Ayala Cota and other employees assured their clients that this was legal.

More "Renaissance-Cases" will crop up. Jesse Ayala Cota's co-defendant, other members of Renaissance and Renaissance's founder and president, Michael Craig Cooper, are set for sentencing in the coming months. Thomas Steelman, another former long-time IRS employee, was sentenced to 46 months in prison August 10, 2009. Several other tax preparers associated with Renaissance have been sentenced to prison or probation.

Lessons Learned? As a consumer, you have to really look at any tax company you choose to work with. If it sounds to good to be true, it is. Don't be afraid to do your own research. Look up the company's rating with the Better Business Bureau and search their reputation on the web. If you don't do you due diligence as a consumer, a shady company might drag you down with them.

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