New York IRS Agent Accused of Trying to Cheat Government on His Taxes

A federal tax agent was arrested on charges that he engaged in tax fraud, finding ways for him and others to dodge taxes by claiming that their income was offset by deductions belonging to a company he operated out of his home.

Harry Willner had worked as an Internal Revenue Service agent since 1974 before he was charged in an indictment in U.S. District Court in Manhattan with corrupt interference with the administration of tax laws and willful aiding in the preparation of a false tax return. If convicted, he could face up to three years in prison on each of six counts.

In court papers, federal prosecutors said Willner, 59, engaged in the scheme while working as a revenue agent with the large and mid-size business unit of the IRS in New York.

They said he carried out the fraud by trying to create tax loopholes while purportedly working as an officer at an advertising business, NIA Advertising Inc., whose address was the same as his residence's.

The government said Willner claimed that NIA loaned a company, Royal Magazine Inc., $849,000 from 1998 through 2001 but provided no evidence of a written contract or agreement to verify the debt.

Willner then claimed a "bad debt" reduction on NIA's corporate tax return of more than $758,000, though he could not take advantage of much of it because the income of the business was minimal, the indictment said.

Afterward, Willner tried to get an accountant to help him get other taxpayers to funnel their income through his advertising business so they could take advantage of the large debt, according to the indictment.

Prosecutors said Willner also tried to use the debt as a deduction by having his fee as a teacher at Manhattan private schools paid to the advertising business rather than directly to him, prosecutors said.

Willner was released on his own recognizance after a brief court appearance Monday. His attorney, Robert Baum, declined to comment.