Mailing of Tax Forms Begins Friday : IRS Prepares Its Holiday Greetings

The Internal Revenue Service said Tuesday that it will launch its annual holiday greetings--85 million 1986 tax packages to be mailed the day after Christmas.

The mailing, the government’s largest, is always conducted in the period immediately following Christmas. The forms, printed in October at 100 printing plants, have been stored at local post offices for several weeks with instructions to begin sending them out after the holiday mailing crush eases.

(There were isolated reports that some post offices may have jumped the gun, however. Some residents of Santa Monica and West Los Angeles, for example, reported receiving their 1986 tax forms last week. “I guess if the Christmas season can begin before Thanksgiving, there’s no reason why tax season can’t jump the New Year,” one Santa Monica resident said.)

IRS officials stressed that the 1986 tax forms closely resemble those of previous years despite the major tax overhaul that begins to take effect Jan. 1. In a letter on the front of the forms, Commissioner Lawrence B. Gibbs warned taxpayers against confusing the new tax law, which dramatically alters personal deductions and tax rates, with the law under which they are filing their 1986 returns.

“You will find that your tax forms this year are very similar to those you filed in the past,” he wrote. “This is because most of the new tax changes do not take effect until after 1986 and therefore will not affect your 1986 taxes.”

If taxpayers look closely, however, they will notice changes from the 1985 forms. The biggest impact will come from the second year of indexing, designed to eliminate “bracket creep”--the phenomenon that pushes a taxpayer into a higher tax bracket when he or she receives a pay raise that merely offsets inflation.

The index for 1986 widens the tax brackets by 3.7%, reflecting the impact of inflation last year. The indexing changes will also boost the personal exemption to $1,080, up from $1,040 on the 1985 return.

The standard deductions for people who don’t itemize also are raised. For single taxpayers, the standard deduction will be $2,480, up from $2,390, and for couples filing a joint return the standard deduction rises to $3,670, up from $3,540.

Among other changes on the 1986 returns:

- The line for the residential energy credit has been dropped, the credit having expired at the end of 1985.

- Taxpayers who don’t itemize will be allowed to deduct 100% of their charitable contributions, up from 50%--an increase that will expire after this year.

- Taxpayers who itemize are directed to list the deduction for mortgage financing points separately from home mortgage interest.

- Taxpayers who owe money will be asked to include a daytime telephone number so the IRS can call them if there is a question about the payment.

Distribution of the tax forms costs the government $9 million in printing expenses and $8 million in postage. The biggest mailing is for the comprehensive 1040 form, which is used by those who itemize deductions or who earn more than $50,000. Other forms include the shorter 1040A form and the 11-line 1040EZ form.