IRS Continues to Simplify Tax Forms

WASHINGTON - One less form to complete, fewer boxes to check and expanded availability of a short form for reporting business profits are among the changes evident in the advance proofs of the 1996 tax forms released today by the Internal Revenue Service.

Taxpayers who want their refunds sent directly to their bank accounts will not need a separate Form 8888 as they did this year. Instead, they will put the necessary account information on their Forms 1040, 1040A or 1040EZ. This direct deposit information is the only new item to appear on each of the basic federal tax forms.

In its continuing effort to simplify filing, the IRS has eliminated the checkboxes for being claimed as a dependent, the tax computation method used and Form 1099 withholding, along with Form 1040's line for recapture taxes. These deletions shorten Form 1040 by three lines.

Two changes to Schedule C-EZ will enable about 400,000 small business owners to join the 3 million who already use this simplified form to report their profits. The IRS removed the $25,000 gross receipts limitation and increased the business expenses limit to $2,500.

The IRS has added light shading marks to the numerical entry areas on Form 1040A and its schedules -- giving each digit a distinct box -- as well as pre-printed dollar signs, commas and periods. This will help taxpayers to complete the forms more correctly and the IRS to process them more quickly and accurately.

For several years, the IRS has issued advance proofs of the most common tax forms for individuals to give the tax community and the public the opportunity for comments or suggestions on how to improve or simplify the forms. The IRS carefully considers each comment and suggestion before finalizing the forms.

For a copy of Publication 1407, the advance forms package, write to the IRS, P.O. Box 25866, Richmond, VA 23289-5866.

Personal computer users can get Publication 1407 through the IRS home page at http://www.irs.gov, or by modem to IRIS, the Internal Revenue Information Services, at 703-321-8020.

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