- Apr 14, 2001
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Report: Tax Returns, Millions in Payments Lost
Reuters
WASHINGTON (Aug. 30) - As many as 40,000 federal tax returns and tax payment checks totaling more than $800 million have been lost or destroyed at a processing center operated by a Pittsburgh bank for the Internal Revenue Service, the Washington Post reported Thursday.
The number of returns affected is far greater than the 1,800 that was thought to be involved when the problem with the Pittsburgh contractor, Mellon Bank, was disclosed earlier this year, the newspaper said.
The bank has not said what happened, but said it does not appear to be a case of identity theft or stolen checks, the newspaper reported.
Sen. Max Baucus, chairman of the Senate Finance Committee, was quoted as saying IRS investigators told that ''the dollar impact has escalated to $810 million.'' The Montana Democrat said 40,000 or more tax returns and tax payments from the Northeast may have been ''concealed or destroyed'' at the Pittsburgh facility.
IRS officials told the newspaper they have been working for several months to track down missing documents from the Mellon processing center.
The Post quoted sources as saying that it appeared the IRS contract penalized Mellon for unprocessed returns and checks rather than rewarding it for those it did process.
''The system was flawed,'' one source said. ''It gave them incentive to stick the payments in a drawer. It was almost cost-effective for Mellon to do that. There was no reward for timely processing.''
Mellon's contract has been canceled, and the bank has fired some workers and laid off others, the Post said.
According to the report, Mellon Chairman Martin McGuinn said in an e-mail to employees last week that the bank lost the contract ''after we found that a significant number of taxpayer submissions had been hidden, and in some instances, destroyed.''
Tax returns and payments from Connecticut, Maine, New Hampshire, Vermont, Massachusetts, Rhode Island and upstate New York were processed at the center, the newspaper said.
The affected taxpayers will have any penalties waived and replacement returns and checks credited as on time, IRS officials were quoted as saying.
Reuters
WASHINGTON (Aug. 30) - As many as 40,000 federal tax returns and tax payment checks totaling more than $800 million have been lost or destroyed at a processing center operated by a Pittsburgh bank for the Internal Revenue Service, the Washington Post reported Thursday.
The number of returns affected is far greater than the 1,800 that was thought to be involved when the problem with the Pittsburgh contractor, Mellon Bank, was disclosed earlier this year, the newspaper said.
The bank has not said what happened, but said it does not appear to be a case of identity theft or stolen checks, the newspaper reported.
Sen. Max Baucus, chairman of the Senate Finance Committee, was quoted as saying IRS investigators told that ''the dollar impact has escalated to $810 million.'' The Montana Democrat said 40,000 or more tax returns and tax payments from the Northeast may have been ''concealed or destroyed'' at the Pittsburgh facility.
IRS officials told the newspaper they have been working for several months to track down missing documents from the Mellon processing center.
The Post quoted sources as saying that it appeared the IRS contract penalized Mellon for unprocessed returns and checks rather than rewarding it for those it did process.
''The system was flawed,'' one source said. ''It gave them incentive to stick the payments in a drawer. It was almost cost-effective for Mellon to do that. There was no reward for timely processing.''
Mellon's contract has been canceled, and the bank has fired some workers and laid off others, the Post said.
According to the report, Mellon Chairman Martin McGuinn said in an e-mail to employees last week that the bank lost the contract ''after we found that a significant number of taxpayer submissions had been hidden, and in some instances, destroyed.''
Tax returns and payments from Connecticut, Maine, New Hampshire, Vermont, Massachusetts, Rhode Island and upstate New York were processed at the center, the newspaper said.
The affected taxpayers will have any penalties waived and replacement returns and checks credited as on time, IRS officials were quoted as saying.
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