Mellon Bank reaches settlement over lost tax returns and checks

Pittsburgh-based Mellon Bank has agreed to pay the federal government $16.5 million to settle all claims relating to the destruction of 77,000 federal individual income tax returns and checks in 2001.

Mellon had a contract to collect and process returns and payments for the Internal Revenue Service during the peak busy season in the spring of 2001. Mellon employees who later claimed they were overworked and unable to meet deadlines purposely destroyed 77,000 tax returns and accompanying checks totaling $1.3 billion at a Pittsburgh service center in April 2001.

Mellon has previously paid the government more than $18 million to cover the interest the government lost on the delayed payments as well as the costs of relocating the Pittsburgh service center to a new site. Mellon has agreed to cooperate with the government and has accepted responsibility for its employees' actions.

In return for the cooperation and the payment of fines, the United State's district attorney's office has agreed not to pursue any civil or administrative monetary claims against Mellon.

Eight former Mellon employees have been indicted relating to their participation in the destruction of the documents. Several have pleaded guilty; court proceedings are pending for others.

Related stories:

  • IRS Loses Taxpayers' Checks

  • Mellon Bank Employees Hid, Shredded Tax Returns

  • IRS Beefs Up Security after Mellon Bank Fiasco

  • Mellon Bank Tax Return Problem Gets Worse

    You may like these other stories...

    Accounting group pushes back against retirement age scrutinyMichael Rapoport of the Wall Street Journal reported that the American Institute of CPAs (AICPA) on Monday pushed back against federal regulators who are again...
    There's still time to take advantage of last-minute, tax-saving moves for dependency exemptions. For 2014, there are bigger dependency exemptions, as well as rules that, in some cases, are dauntingly complex.The 2014...
    Tesco accounting probe finds “inappropriate behavior” by staff – reportsClare Hutchison of Reuters wrote on Sunday that an investigation into a 250 million-pound ($402 million) profit overstatement at...

    Already a member? log in here.

    Upcoming CPE Webinars

    Oct 22This webinar will include discussions of important issues in AU-C 800, Audits of Financial Statements Prepared in Accordance with Special Purpose Frameworks.
    Oct 23Amber Setter will show the value of leadership assessments as tools for individual and organizational leadership development initiatives.
    Oct 30Many Excel users have a love-hate relationship with workbook links.
    Nov 5Join CPA thought leader and peer reviewer Rob Cameron and learn ways to improve the outcome of your peer reviews while maximizing the value of your engagement workflow.