IRS Revenue Agent Harry Willner, 59, of Fair Lawn, New Jersey, is currently awaiting trial in the U.S. District Court, Southern District of New York, after being indicted on four counts of aiding or assisting in the preparation of false tax returns and one count of attempt to interfere with the administration of the Internal Revenue laws.
According to court documents, Willner was an IRS revenue agent assigned to the Large and Midsize Business Division and was also an officer of NIA Advertising, Inc. (NIA). NIA’s address was listed on several company records as Willner’s home address. Willner did not have the IRS’ approval to serve as a corporate officer of NIA.
Willner did receive permission from the IRS to engage in outside, part-time employment, to include an unspecified position with Royal Magazine, Inc. (Royal).
According to NIA’s books and records, NIA allegedly loaned approximately $849,000 to Royal. On NIA’s 2002 federal tax return, Willner reported gross receipts and a bad debt deduction associated with the loan, resulting in a net operating loss of approximately $758,081. Willner then attempted to make fraudulent use of NIA’s net operating losses. A net operating loss is generally allowed when deductions and expenses exceed taxable income. The IRS allows that certain net operating losses can be carried forward or back to offset income in other years.
It is alleged that Willner attempted to sell NIA’s net operating losses to other taxpayers. This scheme was targeted to people who were owed money by NIA. Willner had those taxpayers direct the fee payment to NIA, which would report it as income but pay no tax on it due to the net operating loss offset. Willner then made the payment, less a fee for himself, to the other taxpayer disguised as a loan repayment.
It is also alleged that Willner used the net operating losses to offset his own individual income tax liability by having fee income earned in his individual capacity paid or assigned to NIA. Willner then fraudulently reported the fee income on NIA’s corporate income tax returns as receipts of NIA, rather than on his individual income tax return, to take advantage of NIA’s net operating losses.
If the allegations are proven true, Willner faces possible jail time and fines of up to $45,000.
