A former Internal Revenue Service agent has pleaded guilty in Manhattan federal court to engaging in a scheme in which he attempted to sell to other taxpayers the purported tax losses of a company he owned, as well as use them on his own individual tax returns.

Harry Willner, 59, a revenue agent assigned to the IRS's Large and Midsized Business Unit, was responsible for audits of large financial institutions. He began working for the IRS in 1974.

Willner was also an officer of a company known as NIA Advertising, which had the same address as his home in Fairlawn, N.J. He did not request approval from the IRS to serve as an officer of NIA, as required by IRS regulations, but he did request approval for outside part-time employment as an instructor with schools in Manhattan and to hold an unspecified position with a company called Royal Magazine, according to the U.S. Attorney's Office.

From 1998 to 2001, NIA purportedly loaned Royal approximately $849,000. Beginning in 2002, Willner reported a "bad debt" deduction on NIA's corporate tax return, which resulted in a net operating loss for NIA's 2002 return of more than $758,000.

Between January 2002 and March 2006, Willner attempted to sell NIA's NOLs to other taxpayers to offset the income on their own returns and reduce their own tax liabilities. Between March 2002 and March 2006, Willner also used NIA's NOLs to offset his own individual income tax liability by having fee income, earned as an instructor at the two Manhattan schools, paid or assigned to NIA.

Willner faces a possible sentence of three years in prison and a fine of $250,000. Sentencing is scheduled for March 14, 2008.

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