Lost tax returns may be impetus to start e-filing

I read some interesting tax news recently. It appears that some 40,000 tax returns that were sent to the IRS in April, along with any checks that may have been mailed with those returns, have mysteriously disappeared.  

The missing tax returns have been identified as tax returns that were mailed to the Pittsburgh, Pennsylvania IRS address. The people who mail their tax returns to Pittsburgh live in Connecticut, Massachusetts, Maine, Rhode Island, Vermont and parts of New York (interestingly, no one who lives in Pittsburgh mails tax returns to the IRS's Pittsburgh mailing address - maybe they know something the rest of the northeast doesn't).  

The lost tax returns were entrusted to the folks at the Mellon Bank in Pittsburgh. Mellon Bank is supposed to collect the tax returns, deposit the money in an IRS account, and forward the paperwork via courier to the IRS. Sometimes things just don't go as planned.  

So far, no one has come forward demanding ransom money or making any other requests in return for the kidnapped tax returns. The IRS recommends that anyone whose tax check hasn't yet cleared their bank should stop payment on the check and send another check to the IRS, along with another copy of the tax return.  

The first reaction of someone whose check to the IRS has not cleared the bank might be to set out on a vacation, buy some new furniture, or pay off some debt. Others may think they should just lie low and see if they get caught, then they can always plead ignorance later on.  

The IRS is trying to assure taxpayers that these reactions are not the most responsible means of dealing with what some might consider a minor terrorist act. Of course the IRS doesn't want to worry anyone, but it's quite possible that someone, somewhere, has some pretty personal information about 40,000 or so U.S. taxpayers, including Social Security numbers of all family members, names of employers, level of income, home addresses, and so on.  

The possibility also exists that the missing tax returns were simply destroyed. Apparently there were employees at Mellon Bank who felt it was a little too much work to process tax returns each year, and conceivably piles of tax returns were pitched in the dumpster so as to cut back on overtime hours at the bank.  

Hoping to encourage taxpayers to send in new checks, the kinder, gentler IRS has offered to pick up the tab for any bank charges associated with the stop payment action, and has agreed to waive late payment penalties for taxpayers whose tax returns have disappeared. Actually it seems to me that Mellon Bank, and not the nation's coffers, should pick up the tab for these expenses.  

In addition to making a decision about sending in a new tax return, if I were one of these taxpayers, I’d start watching my mail pretty carefully to see what kinds of new credit cards have been issued in my name, and I'd want to watch my bank account to see if any electronic transfers are being issued. These sorts of things can be easily accomplished with the type of information that has been gathered from the tax returns.  

In any case, the Mellon Bank has lost its contract with the IRS and will no longer have to worry about collecting tax returns and tax money each spring. The bank had been doing the job for eight years.  

Personally, I think this is all a plot to set the stage for encouraging taxpayers to file their returns electronically. I won't be at all surprised if we hear more about this Mellon Bank situation next spring when the IRS is hoisting its e-file flag and encouraging the nation to flock to the Internet for tax return filing. Since I'm still a little shy about allowing the IRS to dip into my bank account for an electronic withdrawal of my tax payment, I'll continue filing my own tax return on paper, for as long as I can. If the Mellon Bank employees want to intercept my tax check, so be it.