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Projections of returns to be filed in calendar years 2002-2009.

Each year, a number of tax return forecasts are prepared by the Internal Revenue Service (IRS) research staff under the National Headquarters Office of Research, Analysis, and Statistics. These projections of the number of returns to be filed include categories of tax forms within the individual, tax-exempt, and business returns areas. The information provided by these projections is a valuable resource for IRS planning, budgeting, and resource allocation needs. This update represents projections made in the fall of 2002.

Table 1 represents the most current forecasts for the major form types that are projected. The grand total of all tax returns to be filed in Calendar Year (CY) 2003 is expected to be 230.6 million. This volume is projected to increase at an approximate annual rate of 1.7 percent through CY 2009, at which time the number of return filings is expected to reach 253.6 million.

In preparing these projections, various factors that may affect IRS workload are carefully reviewed. These include recent filing patterns, economic and demographic trends, enacted legislation, and administrative changes. In these latest projections, partial-year data through late summer 2002 are factored into most forecast models. Legislative and administrative changes approved for future implementation are also factored in the forecasts as "off-model" adjustments. These "adjustments" are explained in more detail in the later part of the article.

The Future of Alternative Filing

The IRS Restructuring and Reform Act of 1998 encourages the promotion of paperless filing--including IRS and private industry partnering efforts. For example, in keeping with that law, a consortium of private sector companies has been formed to provide free electronic tax filing for certain individual returns. This free service, scheduled to start in the CY 2003 filing season, will be available to 60 percent or more of taxpayers. Qualifying taxpayers will be able to access various web sites of consortium member companies through links provided on the IRS home page (www.irs.gov).

The IRS will also provide incentives for practitioners to increase electronic filing (e-filing) by offering them web-based products that allow electronic interactions with the IRS. The electronic services products give qualifying members access to the following activities: electronic account resolution--allows authorized practitioners to submit inquiries for their clients' individual/business tax accounts, disclosure authorization--allows authorized practitioners to electronically submit Power of Attorney or Tax Information Authorization over the Internet, transcript delivery system--speeds request and delivery of taxpayer return/account information, and taxpayer identification number (TIN) matching--allows taxpayers subject to backup withholding to match name and TIN combinations with IRS records. These products will be accessible from the IRS home page.

There are also an increasing number of programs to provide paperless filing in the business returns area. For example, more business friendly e-file tax software is slated for implementation in CY 2003. Also, new e-file options for exempt organization (Forms 990) and corporate income tax (Forms 1120) returns will be available, beginning in CY 2004. The new e-file software initiative will lead to the phase-out of the current e-file, online filed, and magnetic-tape filing options in the employment returns (Forms 941 and 940) area.

The introduction of major new products to the e-file/e-commerce environment, such as the initiatives described above, results in upward adjustments to the projected baseline e-file volumes. However, it is not possible to quantify all likely future developments in the e-file arena, as some IRS plans are still in their infancy, and some technological adaptations are still mostly speculative. Thus, the e-file forecasts of IRS research staff merely reflect extrapolations of existing trends and what is known about future developments. As such, they should not be interpreted as the agency's goals used to preclude an alternative e-file future more in line with targeted levels sought by Congress.

Projection Highlights

Grand Total Returns, Primary Returns, Supplemental Documents

The "grand total" figure encompasses "total primary returns" and "supplemental documents." "Total primary returns" account for the bulk of the IRS returns processing workload and include the three largest return categories: individual income tax returns, employment tax returns, and individual estimated tax payment vouchers. These three form types constitute over 90 percent of the "total primary returns." "Supplemental documents" consist mainly of amended returns and requests for filing extensions by individuals and corporations.

Table 1 presents a complete list of yearly projections by form type and medium of filing through CY 2009. In CY 2003, approximately 212.5 million returns are projected to fall under "total primary returns," and 18.1 million under "supplemental documents." As shown in Figure A, these forecasts reflect an increase of 2.2 percent in primary returns and 3.9 percent in supplemental returns over CY 2002. Figure A also shows an average annual growth rate from CY 2002 through CY 2009 for "total primary returns" and "supplemental documents" of 1.5 percent and 3.6 percent, respectively.

Individual Income Tax Returns

"Total individual returns" are defined as: paper and electronic versions of the major individual income tax returns, Forms 1040, 1040A, 1040EZ; Form 1040NR, U.S. Non-Resident Alien Income Tax Return; Form 1040PR, Planilla para la Declaracion de la Contribucion Federal Sobre El Trabajo Por Cuenta Propia--Puerto Rico; and Form 1040SS, U.S. Self-Employment Tax Return--U.S. Virgin Islands, Guam, American Samoa, the Commonwealth of the Northern Mariana Islands (CNMI), or Puerto Rico. This heading excludes Form 1040X, Individual Amended Return, which is included under the "supplemental documents" heading.

In CY 2003, the number of "total individual returns" filed is projected to reach 132.3 million and grow at an average annual rate of 1.5 percent until CY 2009. At this rate, the projected number of "total individual returns" will reach 145.3 million by CY 2009, with 84.0 million projected to be filed electronically.

Total Individual Electronic Returns Total individual electronic (e-file) returns include individual income tax returns filed via TeleFile, or the "standard" electronic method, as described below. The projected number of individual returns to be filed electronically in CY 2003 is 54.3 million. Under current trends, this number is expected to grow at an average rate of 8.8 percent per year. Notably, the projected e-file pattern for CY 2003 to 2009 is actually one of stronger growth in the initial forecasted years, followed by a dampened growth in the later years, as is customary in the growth pattern for an innovative commercial product.

Standard Electronic Returns

Standard e-file returns are non-TeleFile returns (defined below) filed through an authorized third party, or what is termed an "electronic return originator" (ERO). In general, standard e-file returns are filed either through tax practitioners or from a home computer via an online filing option that routes the return to an ERO. In CY 2002, standard e-file returns are projected to make up 42.6 million of the total individual returns filed. This reflects a relatively large increase (19 percent) over CY 2001. Online filing, particularly, is the fastest growing component of e-file. CY 2002 shows a 38-percent jump over CY 2001 in online filed returns, and it is expected that CY 2003 will see a jump of another 46.5 percent, aided greatly by the new consortium offering free e-file options over the Internet. The strong continued rise of standard e-file returns, in general, is attributable to all the promotion and aggressive product innovations from both the IRS and private industry.

TeleFile

Returns filed via the TeleFile program are transmitted by the filer using a touch-tone telephone. A large share of filers of Form 1040EZ can opt to file, using TeleFile in lieu of a paper return. Unlike standard e-file, however, TeleFile volumes should drop by 0.24 million returns, or 5.5 percent, in CY 2002, and are expected to drop another 4.7 percent in CY 2003. This decline is attributable to several factors, including the migration to other e-file options.

Individual Electronic Returns by Form Type

The strength of the average annual growth rate of electronically-filed individual income tax returns (8.8 percent through CY 2009) compared to that of total individual income tax returns (1.5 percent) is a clear indication that taxpayers may be switching, increasingly, to an electronic filing option. To date, most individual e-file returns reflect taxpayers with less complicated tax situations. As a result, and as illustrated in Figure B, of the 54.3 million total individual e-file returns projected to be filed in CY 2003, only about 39 percent (21.3 million) will have the characteristics of the more complicated "long" Form 1040, if filed on paper. In contrast, 26 percent (14.1 million) will have the characteristics of the "short" Form 1040EZ returns, and another 35 percent (18.9 million) will have the characteristics of the other "short" return, Form 1040A.

Individual Estimated Tax Vouchers

Form 1040ES, Estimated Tax for Individuals, is used by filers who need to make advance tax payments and who expect their tax withholdings to be less than 90 percent of their tax for the year in which they are filing. Individual taxpayers typically file more than one voucher (Form 1040ES) during the course of the year, usually one per quarter. The number of Forms 1040ES filed actually dropped in CY 2002. The suspected reasons for this drop include recent tax law changes which reduced tax liabilities and the dramatic slump in the stock market which has greatly reduced the amount of capital gains being realized, as well as the "sluggish" economic recovery. However, approximately 35.7 million individual estimated tax vouchers are expected to be filed in CY 2003, a projected growth of about 9.1 percent over CY 2002. This return category is expected to grow at an average annual rate of 2.4 percent over the entire period from CY 2002 to CY 2009. In CY 2009, about 38.5 million individual estimated tax vouchers are projected to be filed.

Employment Tax Returns

Paper and electronic versions of several tax forms fall under the heading of employment tax returns. These forms include: Form 940 series, Employer's Annual Federal Unemployment (FUTA) Tax Return; Form 941 series, Employer's Quarterly Federal Tax Return; Form 943 series, Employer's Quarterly Federal Tax Return for Agricultural Employees; Form 945, Annual Return of Withheld Federal Income Tax; and Form CT-1, Employer's Annual Railroad Tax Return.

Employment tax returns make up the third largest component of the "total primary returns" figure, after individual income tax returns and individual estimated tax vouchers. Approximately 29.3 million employment tax returns are projected to be filed in CY 2003. This represents an increase of 0.8 percent over CY 2002. The number is expected to grow at an annual rate of 0.7 percent until CY 2009, when it is projected to reach 30.5 million. The relatively slow rate reflected for this series is based on actual filing experience in recent years, and particularly the slow increase projected for the two largest components, the Form 940 and Form 941 return series.

The Form 941 return series is the largest in the employment tax category, with about 80 percent of the total. In CY 2003, an estimated 23.3 million returns from the Form 941 return series are expected to be filed. The e-file and TeleFile components of the 941 return types are expected to reach 2.9 million and 0.9 million, respectively, in CY 2003.

Both Form 940 and Form 941 have a magnetic tape filing component. Form 940 returns filed by magnetic tape are projected to stay at about 441 thousand in CY 2003, while Form 941 magnetic-tape filings are expected to drop to 785 thousand returns. Both Forms 940 and 941 magnetic-tape filing will undergo major program changes in their respective electronic filing categories. In particular, when magnetic-tape filing in these areas will be phased out over the next few years, these business returns filers are expected to switch over to the enhanced e-file option based on new e-filing software.

Return filings of Form 1042 (Annual Withholding Tax Return for U.S. Source Income of Foreign Persons) are not included in the above total employment tax figure. They are, instead, reported separately in Table 1. Approximately 26.2 thousand Form 1042 returns are expected to be filed in CY 2003. The projected volume is expected to grow slowly to about 26.8 thousand by CY 2009.

Employee Plans Returns

Employee plans returns are filed by employers or other administrators of employee pension plans to report information on the benefits they provide. Employee plan returns include Annual Return/ Report of Employee Benefits Plan (with more than 100 participants) (Form 5500), Annual Return/ Report of Employee Benefits Plan (with fewer than 100 participants) (Form 5500C/R), and Annual Return of One Participant Pension Benefit Plan (Form 5500EZ). However, in July 2000, the Department of Labor assumed the responsibility for processing all employee plan returns associated with Return Year 1999 and beyond so as to capture more of the data on the return than IRS could provide. The IRS continued to be responsible for processing returns filed up to and including those for Return Year 1998--a responsibility which was concluded by July 2001. The IRS will continue to handle other administrative responsibilities regarding employee plan returns (but not their submission processing). The forecasts included in Table 1 reflect this phase-out of IRS submission processing of EP returns.

Partnership Returns

Form 1065, U.S. Partnership Return of Income, and Form 1065B, U.S. Large Partnership Return of Income, are filed by partnerships to report income, deductions, tax credits, or losses. The projected number of these returns to be filed in CY 2003 is 2.3 million. This number, an increase of 4.0 percent over CY 2002, is projected to keep increasing at an average rate of 3.3 percent per year. The number of partnership returns filed is expected to increase to 2.8 million by CY 2009.

Corporation Income Tax Returns

Corporation income tax returns include a number of form types. The vast majority of these returns are filed on Form 1120, U.S. Corporation Income Tax Return, Form 1120A, U.S. Corporation Short-Form Income Tax Return, or Form 1120S, U.S. Income Tax Return for an S Corporation (returns filed by qualifying corporations electing to be taxed through shareholders). The remainder of corporation income tax returns are filed by such entities as homeowners' associations (Form 1120H), foreign corporations (Form 1120F), and real estate investment trusts (Form 1120REIT), among others. Amended returns (Form 1120X) are not included under corporation income tax returns but are instead listed under "supplemental documents." In CY 2003, the projected number of corporation returns filed is 5.8 million. This is nearly a 2.0-percent increase over CY 2002. It is expected that these returns will continue to increase, to 6.6 million by CY 2009, as Table 1 shows. However, as the detail in Figure A also illustrates, this growth in total corporation return filings is primarily tied to the upward trend in Form 1120S filings, whereas filings of Forms 1120 and 1120A are actually projected to decline.

Excise Tax Returns

Excise tax returns include the following four return types: Form 11C, Occupational Tax and Registration Return for Wagering; Form 720, Quarterly Federal Excise Tax Return; Form 730, Tax on Wagering; and Form 2290, Heavy Vehicle Use Tax Return. The total number of excise tax returns filed with the IRS is projected to be 859 thousand in CY 2003. That number is expected to grow to 912 thousand by CY 2009.

Tax-Exempt Organization Returns

The category "exempt organization" traditionally included Form 990 series returns, plus Form 4720, Return of Certain Excise Taxes on Charities and Other Persons Under Chapters 41 and 42 of the Internal Revenue Code and Form 5227, Split-Interest Trust Information Return--all reflecting various returns for organizations exempt from income tax. However, in response to IRS resource-planning needs, this return category has been expanded and now includes the following additional returns: Form 5330, Return of Initial Excise Taxes Related to Employee Benefit Plans; Form 5558, Application for Extension of Time To File Certain Employee Plans Returns; Form 8038, Information Return for Tax-Exempt Private Activity Bond Issues; Form 8038G, Information Return for Government Purpose Tax-Exempt Bond Issues; Form 8038GC, Consolidated Information Return for Small Tax-Exempt Government Bond Issues; Form 8038T, Arbitrage Rebate and Penalty in Lieu of Arbitrage Rebate; Form 8328, Carry Forward Election of Unused Private Activity Bond Volume Cap; Form 8871, Political Organization Notice of Section 527 Status; and Form 8872 Political Organization Report of Contributions and Expenditures. The addition of these forms affects (raises) the reported Exempt Organization figures in Table 1 (for all years shown) as well as the corresponding "total primary total" and "grand total"--compared to research staff forecasts done in prior years. The newly-defined total for exempt organization returns is projected to be just over 1.1 million in CY 2003 and to grow to over 1.2 million by 2009.

Estate Tax Returns

The Economic Growth and Tax Relief Reconciliation Act of 2001 had significant impact on estate tax (Forms 706/706NA) law. The tax relief act reduces estate tax liability by raising the allowable exempt amount of taxable estates and by lowering the maximum tax rate for years 2002 thorough 2009. Under current law, the estate tax will be repealed on all estates where the year of death is 2010. In 2011, however, under existing law, estate tax will then revert to the law in place before June 7, 2001. The effects of this new tax law account for the projected downward trend in estate tax return filings.

New Submission Processing Center Alignments

The IRS is continuing its modernization efforts, begun in CY 2001, to realign and consolidate its ten submission processing centers for paper returns. Cincinnati and Ogden centers will discontinue accepting individual returns and process virtually all business and certain other returns, starting in CY 2003. Included are such returns as employment tax, estate and trust income tax, tax-exempt organization, employee plans, partnership, estate, gift, and corporation tax returns. The Brookhaven center will process fewer individual returns in CY 2003 than it did in CY 2002, and will cease to exist as a submission processing center in CY 2004. All paper individual tax returns and related forms, such as the individual estimated tax vouchers, will be then redistributed and processed in the remaining seven centers.

IRS modernization plans for the realignment of the processing of electronically-filed returns are also currently under way, although final decisions are pending in many program areas.

Projection Methodology

A variety of statistical methods are employed in the production of the projections represented in this article. In general, each unique return (form) type has its own forecasting methodology. Among the forecasting models employed are regression analyses, exponential smoothing techniques, weighted moving averages, and other time series models that incorporate historically observed growth rates.

Partial-year data through late summer of CY 2002 were generally available at the time these projections were made. These partial-year data were extrapolated for the full year and factored into the models.

Regression Analysis

One of the common methods the IRS staff uses in forecasting is econometric modeling. It is used when a solid statistical relationship can be formed between the historical filings of a tax return and an economic or demographic independent variable. Some examples of these independent variables include estimates of personal income, and employment, as provided by Global Insight, Inc. These variables, where applicable, are lagged 1 year to reflect their effect on the filings of the tax return for the specific tax year.

Time Series Analysis

In the case where no statistically relevant relationship can be found between the filing pattern of a form type and an independent variable(s), the research staff then employs trend extrapolation methods. The two most common forms of these time series models are weighted moving averages and exponential smoothing.

Growth Rates

If the actual recorded data are insufficient to form the basis for a reliable statistical projection model, then simple growth rates are used as the final approach. This method assumes that, for a given form type, a previously observed growth pattern will continue into the future for a limited number of years. Should historical data be nonexistent or the data prove to be ineffective in deriving any growth pattern assumption, the pattern for a related form with an established trend is used as a proxy.

Off-Model Adjustments

"Off-model adjustment" is a term used to describe additional changes occasionally made to the initial projection generated by the statistical model. These changes are typically made in the case of legislative or administrative changes that will have effects in the future and which the statistical forecasting models are not designed to take into account. These off-model adjustments are estimated from other available data or the judgment of knowledgeable program staff. The projections of estate tax returns (Form 706 series) provide a clear example of such off-model adjustments. The projection for estate tax returns reflects adjustments for the estimated impact of the Economic Growth and Tax Relief Reconciliation Act of 2001, which gradually reduces this tax, in stages. However, most legislative or administrative changes must be formally enacted in order to be factored into the forecasts developed by the IRS research staff.
Table 1.--Number of Returns Filed, or To Be Filed, With the Internal
Revenue Service, Calendar Years 2001-2009
[Numbers of returns are in thousands]

 Estimated
 Actual (1) Projected
Type of return
 2001 2002 2003

 (1) (2) (3)

Grand total (2) 229,933 225,298 230,560

Total primary returns (3) 213,071 207,889 212,471
 Individual income tax, total (4) 130,094 131,248 132,332
 Forms 1040, 1040A, and 1040EZ (5) 129,445 130,625 131,686
 Paper Individual returns, total 89,238 83,830 77,376
 Paper Form 1040 62,452 59,303 56,402
 Paper Form 1040A 15,209 13,893 11,568
 Paper Form 1040EZ 11,577 10,634 9,406
 Electronically-filed Individual
 returns, total 40,207 46,795 54,310
 Online filing 6,831 9,415 13,794
 Practitioner electronic
 filing 28,957 33,204 36,537
 TeleFile 4,419 4,176 3,978
 Forms 1040NR, 1040PR, and 1040SS 649 623 646
 Individual estimated tax, Form
 1040-ES, total 39,023 32,715 35,697
 Paper Form 1040-ES 38,983 32,673 35,605
 Electronic (credit card) Form
 1040-ES 40 42 92
 Estate and trust income tax, Form
 1041, total 3,919 3,711 3,778
 Paper estate and trust income tax
 returns 2,447 2,435 2,425
 Electronic/magnetic tape estate
 and trust income tax returns 1,472 1,276 1,353
 Fiduciary estimated tax, Form
 1041-ES 933 786 798
 Partnership, Forms 1065 and 1065B 2,165 2,258 2,348
 Paper partnership returns 2,156 2,226 2,271
 Electronically-filed partnership
 returns 9 31 78
 Corporation income tax, total 5,561 5,717 5,830
 Paper corporation returns 5,561 5,717 5,830
 Electronically-filed corporation
 returns N/A N/A -
 Form 1120, total 2,129 2,121 2,091
 Form 1120A, total 236 226 219
 Electronic Form 1120/1120A - - -
 Form 1120F 23 23 24
 Form 1120-FSC (6) 5 5 1
 Form 1120-H 120 124 127
 Form 1120-POLL, total 7 8 9
 Electronic Form 1120-POLL N/A N/A -
 Form 1120-RIC 11 12 12
 Form 1120S, total 3,023 3,190 3,339
 Electronic Form 1120S N/A N/A -
 Forms 1120L/PC/REIT/SF 8 8 9
 Estate tax, Forms 706, and 706NA,
 total 122 125 78
 Gift tax, Form 709 304 255 274
 Employment tax, total (7) 28,936 29,053 29,290
 Paper employment returns 24,111 23,954 23,732
 Magnetic tape employment returns 2,071 1,342 1,226
 Electronic employment returns 2,754 3,758 4,332
 Forms 940, 940EZ, and 940PR,
 total 5,545 5,495 5,527
 Paper Forms 940,940EZ, and
 940PR 4,830 4,732 4,610
 Magnetic tape Forms 940 684 441 441
 Forms 940 e-file/online/XML 31 322 476
 Forms 941, 941PRJSS/E, total 22,920 23,099 23,319
 Paper Forms 941, 941PR/SS/E 18,810 18,763 18,678
 Magnetic tape Form 941 1,387 901 785
 Form 941 e-file/online/XML 1,878 2,536 2,950
 Form 941 TEL 845 900 907
 Forms 943 and 943 PR 291 283 271
 Form 945 178 174 171
 Form CT-1 2 2 2
 Form 1042 (8) 26 26 26
 Tax-exempt organization, total (9) 1,080 1,101 1,119
 Paper exempt organization 1,080 1,101 1,119
 Electronic exempt organization N/A N/A N/A
 Forms 990/EZ/C/PF/T, 4720, and
 5227, total 724 749 774
 Forms 990, total 352 363 375
 Electronic Forms 990 N/A N/A N/A
 Forms 990EZ, total 129 132 134
 Electronic Forms 990EZ N/A N/A N/A
 Form 990C 4 4 4
 Form 990PF 73 76 78
 Form 990T 48 49 50
 Form 4720 2 2 2
 Form 5227 116 124 132
 Forms 8038/G/GC/T, 5330, 5558,
 8328, 8871, and 8872, total 356 352 346
 Form 8038 5 5 4
 Form 8038G 28 28 28
 Form 8038GC 11 10 9
 Form 8038T 1 1 1
 Form 5330 28 29 29
 Form 5558 274 272 266
 Form 8328 N/A N/A N/A
 Form 8871 2 2 2
 Form 8872 6 6 6
 Employee plans (10) 46 N/A N/A
 Excise tax (11) 815 851 859
 Form 8752 (12) 47 44 42

Supplemental documents (13) 16,862 17,408 18,089
 Form 1040X 3,467 3,551 3,759
 Form 4868, total 7,926 8,274 8,555
 Paper Form 4868 7,468 7,430 7,500
 Electronic Form 4868 458 844 1,055
 Credit card Form 4868 22 23 24
 Form 4868 e-file 253 335 421
 Form 4868 TeleFile 183 486 610
 Form 2688 2,557 2,661 2,761
 Form 1120X 15 15 14
 Form 7004 2,896 2,908 3,000

 Projected
Type of return
 2004 2005 2006

 (4) (5) (6)

Grand total (2) 234,822 239,340 243,442

Total primary returns (3) 216,054 219,879 223,291
 Individual income tax, total (4) 134,603 137,142 139,323
 Forms 1040, 1040A, and 1040EZ (5) 133,934 136,449 138,608
 Paper Individual returns, total 73,481 (6) 69,858 66,718
 Paper Form 1040 53,962 51,276 48,670
 Paper Form 1040A 10,441 9,688 9,208
 Paper Form 1040EZ 9,078 8,893 8,840
 Electronically-filed Individual
 returns, total 60,453 66,592 71,890
 Online filing 16,590 19,314 21,541
 Practitioner electronic
 filing 40,074 43,669 46,913
 TeleFile 3,790 3,609 3,437
 Forms 1040NR, 1040PR, and 1040SS 669 692 715
 Individual estimated tax, Form
 1040-ES, total 36,442 37,187 37,932
 Paper Form 1040-ES 36,326 37,046 37,765
 Electronic (credit card) Form
 1040-ES 116 141 167
 Estate and trust income tax, Form
 1041, total 3,857 3,936 4,015
 Paper estate and trust income tax
 returns 2,427 2,429 2,431
 Electronic/magnetic tape estate
 and trust income tax returns 1,430 1,507 1,583
 Fiduciary estimated tax, Form
 1041-ES 810 821 831
 Partnership, Forms 1065 and 1065B 2,436 2,522 2,605
 Paper partnership returns 2,239 2,263 2,287
 Electronically-filed partnership
 returns 197 259 318
 Corporation income tax, total 5,957 6,082 6,207
 Paper corporation returns 5,789 5,771 5,698
 Electronically-filed corporation
 returns 168 311 508
 Form 1120, total 2,074 2,060 2,048
 Form 1120A, total 213 208 204
 Electronic Form 1120/1120A 67 121 192
 Form 1120F 24 24 24
 Form 1120-FSC (6) N/A N/A N/A
 Form 1120-H 131 135 140
 Form 1120-POL, total 9 9 9
 Electronic Form 1120-POL N/A 1 1
 Form 1120-RIC 13 13 14
 Form 1120S, total 3,484 3,624 3,758
 Electronic Form 1120S 101 190 315
 Forms 1120L/PC/REIT/SF 9 9 9
 Estate tax, Forms 706, and 706NA,
 total 83 66 70
 Gift tax, Form 709 285 296 306
 Employment tax, total (7) 29,511 29,731 29,881
 Paper employment returns 23,469 23,270 22,981
 Magnetic tape employment returns 148 N/A N/A
 Electronic employment returns 5,893 6,461 6,899
 Forms 940, 940EZ, and 940PR,
 total 5,540 5,554 5,566
 Paper Forms 940,940EZ, and
 940PR 4,436 4,350 4,247
 Magnetic tape Forms 940 44 N/A N/A
 Forms 940 e-file/online/XML 1,060 1,204 1,319
 Forms 941, 941PRJSS/E, total 23,539 23,759 23,909
 Paper Forms 941, 941PR/SS/E 18,602 18,503 18,329
 Magnetic tape Form 941 104 N/A N/A
 Form 941 e-file/online/XML 3,919 4,332 4,646
 Form 941 TEL 913 925 935
 Forms 943 and 943 PR 260 250 239
 Form 945 169 167 165
 Form CT-1 2 2 2
 Form 1042 (8) 26 26 27
 Tax-exempt organization, total (9) 1,138 1,156 1,174
 Paper exempt organization 1,091 1,080 1,073
 Electronic exempt organization 47 76 102
 Forms 990/EZ/C/PF/T, 4720, and
 5227, total 798 823 848
 Forms 990, total 387 398 410
 Electronic Forms 990 39 62 82
 Forms 990EZ, total 137 139 141
 Electronic Forms 990EZ 7 14 20
 Form 990C 3 3 3
 Form 990PF 80 83 85
 Form 990T 51 52 52
 Form 4720 2 2 2
 Form 5227 139 147 154
 Forms 8038/G/GC/T, 5330, 5558,
 8328, 8871, and 8872, total 339 333 327
 Form 8038 4 4 4
 Form 8038G 28 29 29
 Form 8038GC 9 8 8
 Form 8038T 1 1 1
 Form 5330 28 28 27
 Form 5558 261 255 250
 Form 8328 N/A N/A N/A
 Form 8871 2 2 2
 Form 8872 6 6 6
 Employee plans (10) N/A N/A N/A
 Excise tax (11) 868 877 886
 Form 8752 (12) 40 38 36

Supplemental documents (13) 18,768 19,462 20,151
 Form 1040X 3,964 4,182 4,394
 Form 4868, total 8,836 9,118 9,401
 Paper Form 4868 7,528 7,582 7,658
 Electronic Form 4868 1,307 1,536 1,744
 Credit card Form 4868 24 25 25
 Form 4868 e-file 524 617 702
 Form 4868 TeleFile 759 894 1,017
 Form 2688 2,862 2,964 3,066
 Form 1120X 14 13 13
 Form 7004 3,093 3,185 3,277

 Projected

Type of return
 2007 2008 2009

 (7) (8) (9)

Grand total (2) 246,772 250,171 253,635

Total primary returns (3) 226,932 228,638 231,400
 Individual income tax, total (4) 141,309 143,287 145,333
 Forms 1040, 1040A, and 1040EZ (5) 140,570 142,526 144,549
 Paper Individual returns, total 64,069 61,930 60,503
 Paper Form 1040 46,834 45,188 44,120
 Paper Form 1040A 8,529 8,158 7,874
 Paper Form 1040EZ 8,705 8,585 8,509
 Electronically-filed Individual
 returns, total 76,502 80,596 84,046
 Online filing 23,340 24,823 26,104
 Practitioner electronic
 filing 49,890 52,659 54,978
 TeleFile 3,272 3,114 2,963
 Forms 1040NR, 1040PR, and 1040SS 738 761 784
 Individual estimated tax, Form
 1040-ES, total 38,118 38,304 38,490
 Paper Form 1040-ES 37,925 38,085 38,244
 Electronic (credit card) Form
 1040-ES 194 220 246
 Estate and trust income tax, Form
 1041, total 4,093 4,172 4,251
 Paper estate and trust income tax
 returns 2,433 2,435 2,437
 Electronic/magnetic tape estate
 and trust income tax returns 1,660 1,737 1,814
 Fiduciary estimated tax, Form
 1041-ES 842 851 861
 Partnership, Forms 1065 and 1065B 2,686 2,764 2,841
 Paper partnership returns 2,323 2,352 2,379
 Electronically-filed partnership
 returns 362 413 462
 Corporation income tax, total 6,329 6,450 6,570
 Paper corporation returns 5,570 5,487 5,429
 Electronically-filed corporation
 returns 759 964 1,141
 Form 1120, total 2,038 2,030 2,024
 Form 1120A, total 201 199 197
 Electronic Form 1120/1120A 280 348 404
 Form 1120F 25 25 25
 Form 1120-FSC (6) N/A N/A N/A
 Form 1120-H 144 149 154
 Form 1120-POL, total 9 9 9
 Electronic Form 1120-POL 2 2 2
 Form 1120-RIC 15 15 16
 Form 1120S, total 3,887 4,013 4,136
 Electronic Form 1120S 477 613 734
 Forms 1120L/PC/REIT/SF 10 10 10
 Estate tax, Forms 706, and 706NA,
 total 49 51 54
 Gift tax, Form 709 315 323 331
 Employment tax, total (7) 30,045 30,261 30,470
 Paper employment returns 22,659 22,466 22,258
 Magnetic tape employment returns N/A N/A N/A
 Electronic employment returns 7,386 7,795 8,212
 Forms 940, 940EZ, and 940PR,
 total 5,579 5,591 5,602
 Paper Forms 940,940EZ, and
 940PR 4,111 4,066 4,022
 Magnetic tape Forms 940 N/A N/A N/A
 Forms 940 e-file/online/XML 1,468 1,525 1,581
 Forms 941, 941PRJSS/E, total 24,073 24,291 24,500
 Paper Forms 941, 941PR/SS/E 18,155 18,020 17,869
 Magnetic tape Form 941 N/A N/A N/A
 Form 941 e-file/online/XML 4,972 5,310 5,657
 Form 941 TEL 947 960 975
 Forms 943 and 943 PR 229 218 208
 Form 945 162 160 158
 Form CT-1 1 1 1
 Form 1042 (8) 27 27 27
 Tax-exempt organization, total (9) 1,193 1,211 1,230
 Paper exempt organization 1,065 1,059 1,061
 Electronic exempt organization 128 152 169
 Forms 990/EZ/C/PF/T, 4720, and
 5227, total 873 897 922
 Forms 990, total 422 433 445
 Electronic Forms 990 102 121 134
 Forms 990EZ, total 144 146 149
 Electronic Forms 990EZ 26 32 35
 Form 990C 3 3 3
 Form 990PF 87 89 92
 Form 990T 53 54 55
 Form 4720 2 2 2
 Form 5227 162 170 177
 Forms 8038/G/GC/T, 5330, 5558,
 8328, 8871, and 8872, total 320 314 308
 Form 8038 4 4 4
 Form 8038G 29 29 30
 Form 8038GC 7 7 7
 Form 8038T 1 1 1
 Form 5330 27 26 26
 Form 5558 244 238 233
 Form 8328 N/A N/A N/A
 Form 8871 2 2 2
 Form 8872 6 6 6
 Employee plans (10) N/A N/A N/A
 Excise tax (11) 894 903 912
 Form 8752 (12) 34 33 32

Supplemental documents (13) 20,840 21,534 22,235
 Form 1040X 4,605 4,819 5,039
 Form 4868, total 9,685 9,970 10,255
 Paper Form 4868 7,752 7,863 7,988
 Electronic Form 4868 1,933 2,107 2,267
 Credit card Form 4868 25 25 25
 Form 4868 e-file 779 850 916
 Form 4868 TeleFile 1,129 1,231 1,326
 Form 2688 3,168 3,271 3,375
 Form 1120X 12 12 11
 Form 7004 3,370 3,462 3,554

N/A--Not applicable.

(1) Estimate is based on return information collected through
August 2002

(2) Grand total is the sum of Total primary returns and
Supplemental documents.

(3) Total primary returns is the sum of all returns, excluding
Supplemental documents.

(4) Individual total is the sum of paper and electronic
Forms 1040, 1040A, 1040EZ, 1040NR, 1040PR, and 1040SS.

(5) Forms 1040/A/EZ are the sum of the paper and electronic
Forms 1040, 1040A, and 1040EZ Form 1040 PC was discontinued
in CY 2000.

(6) Form 1120FSC returns are not expected after CY 2003 due to
legislative changes.

(7) Employment tax includes paper, magnetic-tape, and electronic
Forms 940, 940EZ, 940PR, 941,941 PR, 941 SS, 943, 943PR, 945,
and CT-1.

(8) Form 1042 is the Annual Withholding Tax Return for U.S.
Source Income of Foreign Persons.

(9) Exempt organization includes Forms 990, 990EZ, 990T, 990C,
990PF, 4720, 5227, and the following new Forms 5330, 5558, 8038,
8038G, 8038GC, 8038T, 8328, 8871, and 8872.

(10) Employee plans include paper and electronic Forms 5500,
5500EZ, and 5500C/R. IRS processing of this return series is
phased out by July 2001, reflecting the gradual transfer of
processing responsibilities to the Department of Labor.

(11) Excise tax includes Forms 11C, 720, 730, and 2290.

(12) Form 8752 is Required Payment or Refund Under Section 7519,
a computation of payment or refund by partnership or S corporation.

(13) Supplemental documents consist mainly of applications for
extensions of time to file and amended tax returns.

NOTE: Detail may not add to totals because of rounding.

Figure A
Projection Overview of Returns To Be Filled
for Calendar Years 2002-2009

 Average
 Type of return Percentage annual
 2,003 increase, percentage
 projection from 2002 increase,
 2003-2009

 (1) (2) (3)

Grand total 230,560,200 2.34 1.71

Total primary returns 212,471,200 2.20 1.54

 Individual income tax, total 132,332,000 0.83 1.47
 Forms 1040, 1040A, and 1040EZ 131,685,800 0.81 1.46
 Total Paper Individual Returns 77,376,300 -7.70 -4.54
 Paper Form 1040 56,401,900 -4.89 -4.13
 Paper Form 1040A 11,568,300 -16.73 -7.69
 Paper Form 1040EZ 9,406,100 -11.54 -3.07
 Total individual
 electronic returns 54,309,500 16.06 8.79
 Online filing 13,794,400 46.52 16.37
 Practitioner
 electronic filing 36,536,700 10.04 7.49
 TeleFile 3,978,400 -4.73 -4.78
 Forms 1040NR,
 1040PR, and 1040SS 646,200 3.69 3.34
 -- --
 Individual estimated
 tax, Form 1040-ES, total 35,696,700 9.11 2.39
 Paper Form 1040-ES 35,605,200 8.97 2.31
 Electronic (credit card)
 Form 1040-ES 91,500 119.42 32.48
 -- --
 Estate and trust income
 tax (Form 1041), total 3,778,100 1.81 1.96
 Paper fiduciary returns 2,425,200 -0.41 0.01
 Electronic/magnetic
 tape fiduciary returns 1,352,900 6.03 5.16
 -- --
 Fiduciary estimated
 tax, Form 1041-ES 798,000 1.55 1.31
 -- --
 Partnership, Forms
 1065 and 1065B 2,348,200 4.00 3.34
 Paper partnership returns 2,270,600 1.99 0.96
 Electronically-filed
 partnership returns 77,600 147.13 56.42
 -- --
 Corporation income tax, total 5,829,500 1 97 2.01
 Paper corporation returns 5,829,500 1.97 -0.73
 Electronically-filed
 corporation returns -- -- N/A
 Form 1120, total 2,091,200 -1.41 -0.67
 Form 1120A, total 218,700 -3.23 -1.95
 Electronic Form 1120/1120A -- -- N/A
 Form 1120F 23,600 3.06 1.15
 Form 1120FSC 700 -85.42 N/A
 Form 1120H 126,900 2.67 3.14
 Form 1120POL, total 8,500 2.41 1.17
 Electronic Form 1120POL -- -- N/A
 Form 1120RIC 12,300 5.13 4.39
 Form 1120S, total 3,339,200 4.67 3.78
 Electronic Form 1120S -- -- N/A
 Forms 1120L/PC/REIT/SF 8,600 3.62 2.55
 Estate tax, Forms 706,
 and 706NA, total 78,100 -37.47 -9.54
 Gift tax, Form 709 274,400 7.57 3.82
 -- --
 Employment tax, total 29,289,500 0.82 0.68
 Paper employment returns 23,732,000 -0.92 -1.04
 Magnetic tape
 employment returns 1,225,900 -8.62 N/A
 Electronic returns 4,331,500 15.27 12.24
 Forms 940, 940EZ
 and 940PR, total 5,526,500 0.58 0.28
 Paper Forms 940,
 940EZ, and 940PR. 4,610,200 -2.58 -2.29
 Magnetic tape Form 940 440,800 N/A N/A
 Form 940
 e-file/online/XML 475,500 47.72 30.37
 Forms 941, 941
 PR/SS/E, total 23,319,300 0.95 0.84
 Paper Forms 941,
 941PR/SS/E 18,678,100 -0.45 -0.69
 Magnetic tape Form 941 785,100 -12.83 N/A
 Form 941
 e-file/online/XML 2,949,500 16.30 12.47
 Form 941 TEL 906,500 0.77 1.15
 Forms 943 and 943 PR 270,700 -4.41 -4.31
 Form 945 171,400 -1.27 -1.35
 Form CT-1 1,600 -5.88 -3.71

 Form 1042 26,200 1.16 0.49

 Tax-exempt organization, total 1,119,200 1.64 1.59
 Paper exempt organization 1,119,200 1.64 -0.52
 Electronic exempt organization -- -- --
 Forms 990/EZ/C/PF/T,
 4720, and 5227 773,500 3.30 3.02
 Forms 990, total 374,900 3.19 2.94
 Electronic Form 990 -- -- --
 Forms 990EZ, total 134,200 1.82 1.74
 Electronic Forms 990EZ -- -- --
 Form 990C 3,500 -5.41 -3.90
 Form 990PF 77,900 3.04 2.78
 Form 990T 49,900 1.63 1.61
 Form 4720 1,500 -- 2.69
 Form 5227 131,500 6.13 5.26
 Forms 8038/G/GC/T, 5330, 5558,
 8328, 8871, and 8872, total 345,700 -1.87 -1.90
 Form 8038 4,400 -2.22 -2.02
 Form 8038G 27,900 0.72 0.90
 Form 8038GC 9,100 -7.14 -5.08
 Form 8038T 1,000 -- --
 Form 5330 28,700 -1.71 -1.70
 Form 5558 266,400 -206 -2.20
 Form 8328 200 -- --
 Form 8871 1,800 -- --
 Form 8872 6,100 -- --

 Employee plans N/A N/A N/A

 Excise tax 859,300 0.96 0.99

 Form 8752 42 -4.98 -4.68

Supplemental documents 18,089,000 3.91 3.56

 Form 1040X 3,759,000 5.85 5.13
 Form 4868, total 8,554,500 3.39 3.11
 Paper Form 4868 7,499,900 0.94 1.04
 Electronic Form 4868 1,054,700 25.02 15.35
 Credit card Form 4868 23,500 3.52 1.62
 Form 4868 e-file 421,200 25.58 15.62
 Form 4868 TeleFile 609,900 25.62 15.62
 Form 2688 2,761,100 3.77 3.46
 Form 1120X 14,100 -3.42 -3.59
 Form 7004 3,000,300 3.18 2.91

N/A--Not applicable

NOTES: For definition of most of the form numbers, see the text
discussion and the footnotes to Table 1, at the end of this article.
Detail may not add to total due to rounding.

Figure B
Electronically-Filed Individual Income Tax
Returns by Form Type, Projections for
Calendar Year 2003

54.3 million

1040 39.3%
1040A 34.7%
1040EZ 26.0%

Note: Table made from pie chart.


Notes and References

[1] All values in Table 1 are taken from the 2002 update of Calendar Year Return Projections for the United States and IRS Centers: 2002-2009, IRS Document 6186, November 2002, National Headquarters Office of Research, Analysis, and Statistics, Internal Revenue Service, U.S. Department of the Treasury.

[2] These values are taken from the Fall 2002 update of Calendar Year Projections of Individual Returns by Major Processing Categories, Document 6187, October 2002, National Headquarters Office of Research, Analysis, and Statistics, Internal Revenue Service, U.S. Department of the Treasury. Detail does not add to totals because of rounding.

[3] Magnetic tape refers to returns filed and processed on magnetic tape at the IRS submission processing centers.

[4] In July 2000, the Department of Labor assumed the responsibility for processing all employee plans returns associated with Return Year 1999 and beyond so as to capture more of the data on the return than IRS could provide). The forecasts included in Table 1 reflect the phaseout of IRS submission processing of EP returns.

[5] The Tax-Exempt return category has been expanded and now includes the following additional returns: Form 5330, Return of Initial Excise Taxes Related to Employee Benefit Plans; Form 5558, Application for Extension of Time To File Certain Employee Plans Returns; Form 8038, Information Return for Tax-Exempt Private Activity Bond Issues; Form 8038G, Information Return for Government Purpose Tax-Exempt Bond Issues; Form 8038GC, Consolidated Information Return for Small Tax-Exempt Government Bond Issues; Form 8038T, Arbitrage Rebate and Penalty in Lieu of Arbitrage Rebate; Form 8328, Carry Forward Election of Unused Private Activity Bond Volume Cap; Form 8871, Political Organization Notice of Section 527 Status; and Form 8872, Political Organization Report of Contributions and Expenditures. These additional forms raise the reported Exempt Organization figures in Table 1 (for all years shown) as well as the corresponding "total primary total" and "grand total"--compared to research staff forecasts done in prior years.

Terry Manzi is an economist with the National Office of Research Headquarters. This article was written under the direction of Rusty Geiman, Chief Projections and Forecasting Group.
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Author:Manzi, Terry
Publication:Statistics of Income. SOI Bulletin
Geographic Code:1USA
Date:Dec 22, 2002
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