Mellon Bank Tax Return Problem Gets Worse

Earlier this year it was disclosed that, in the spring of 2001, employees at Pittsburgh's Mellon Bank tax processing center, responsible for processing tax returns for the states in the northeast, hid and in some cases destroyed [1] by shredding at least 40,000 federal income tax returns and accompanying payments.

The amount of the destroyed tax return checks was estimated to be at least $810 million.

Now it appears that the number of mishandled tax returns exceeds [2] 70,000, with an estimated $1.2 million in accompanying payments.

Mellon Bank lost its contract with the IRS to collect and process tax returns.

Affected taxpayers are not being penalized by the IRS. So far, the IRS has spent approximately $2 million to straighten out problems caused by the mishandling of tax documents.