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...

    Being an accountant doesn't mean you're giving investment advice to clients. However, at tax time, accountants often have to deal with the results of any investment advice clients obtained during the year—the...
    Anti Burger Kings: Seven US companies shrinking tax the old-fashioned wayBurger King’s decision to combine with Canadian donut shop Tim Hortons is renewing controversy over the lengths some US companies will go to...
    A new report released on Tuesday found that the US airline industry receives nearly $1 billion in tax breaks annually from states for jet fuel.The study, conducted by UNITE HERE International Union, a labor union that...

    Already a member? log in here.

    Upcoming CPE Webinars

    Sep 9
    In this session we'll discuss the types of technologies and their uses in a small accounting firm office.
    Sep 10
    Transfer your knowledge and experience to prepare your team for the challenges and opportunities of an accounting career.
    Sep 11
    This webcast will include discussions of commonly-applicable Clarified Auditing Standards for audits of non-public, non-governmental entities.
    Sep 26
    In this jam-packed presentation Excel expert David Ringstrom, CPA will give you a crash-course in creating spreadsheet-based dashboards. A dashboard condenses large amounts of data into a compact space, yet enables the end user to easily drill down into details when warranted.