ELECTRONIC DISSEMINATION OF INTERNAL REVENUE SERVICE LOCALITY DATA

ELECTRONIC DISSEMINATION OF INTERNAL REVENUE SERVICE LOCALITY DATA

Emily Gross and Beth Kilss,

Internal Revenue Service

Presented at the 2002 American Statistical Association

The Statistics of Income (SOI) Division of the Internal

Revenue Service (IRS) offers many income tax data

products in electronic format. While some of these

products are electronic versions of SOI publications,

others cannot be found in any published materials. By

far, the most frequently requested of these types of data

are individual taxpayer data by geographical area. The

tables offered through SOI include: individual income

and tax data by State and size of adjusted gross income;

county income data; county-to-county migration data;

State-to-State migration data; and ZIP code area data.

Some of these tables are available on SOI’s website as

downloadable spreadsheet files, while others are

disseminated by CD-ROM or e-mail.

Customers of SOI Data

SOI provides its data to many customers, but its two

primary ones are the Office of Tax Analysis (OTA) in

the Office of the Secretary of the Treasury, and OTA’s

legislative counterpart, the Congressional Joint

Committee on Taxation (JCT). In the Department of

Commerce, the Bureau of Economic Analysis (BEA)

and the Bureau of the Census are significant users; the

former uses the SOI sample data (content rich but lower

volume) for estimating components in the national

income and product accounts, and the latter’s needs are

primarily for master file (“population”) data.

SOI data users outside of the Government sector include

academia, the media, demographers, and public

libraries. In addition, other areas of the IRS use SOI

data for their internal operations.

This paper will begin with an overview of the IRS’s

Statistics of Income Program, which distributes the

locality data. Next, there will be a description of the

types of locality income data the IRS offers, the

electronic formats available, the years covered by the

data, and the sources and limitations of the data.

Following that, practical applications of the data will be

shown, as well as some interesting ongoing studies by

some of our customers. Finally, some innovations for

the future will be highlighted as the SOI Division plans

to make its statistics even more readily available to the

thousands of citizens who download its files each year.

Some SOI Products and Services

As a byproduct of producing data for its primary

customers, Statistics of Income information is also made

publicly available through both printed publications and

electronic media.

The Statistics of Income (SOI)

Bulletin is published quarterly, with each issue

containing four to eight articles and data releases of

recently completed studies, as well as historical tables

covering a variety of subject matter, from Treasury

Department tax collections to taxpayer assistance and

tax return projections [2]. SOI produces separate annual

"complete reports" on individual and corporation

income tax returns, which contain more comprehensive

data than those published earlier in the Bulletin [3,4].

The Corporation Source Book is also published

annually, presenting detailed income statement, balance

sheet, and tax data by industry and asset size [5].

Another annual SOI product is the IRS Data Book,

which contains statistical tables and organizational

information on a fiscal year basis [6]. A series of

reports, including research articles documenting

technological and methodological changes in SOI

programs and other related statistical uses of

administrative records, is also published by SOI

annually or biannually [7]. And last, but not least,

periodically, SOI produces special compendiums of

research and analysis, covering topics such as nonprofit

organizations, estate taxation and personal wealth, and

international business activities [8,9,10].

Background on the Statistics of Income Program

The IRS’s Statistics of Income (SOI) Program began

over 86 years ago, following the passage of the Revenue

Act of 1916, which required the annual publication of

statistics. Although there have been many revisions to

the tax law since that time, the original mandate of that

Act continues today. Thus, throughout its long history,

SOI has been preparing and publishing financial

statistics from various types of tax and information

returns filed [1].

SOI conducts the Internal Revenue Service's studies on

individuals,

corporations,

partnerships,

sole

proprietorships, estates, nonprofit organizations, and

trusts, as well as specialized studies covering both

inbound and outbound international activities. Its

mission is to collect and process data so that they

become meaningful information and to disseminate this

information to its customers and users.

1

Public awareness of SOI products and services has

grown rapidly over the past several years due to the

IRS World Wide Web site, which provides users an

easy option for accessing SOI data. The SOI web site,

accessible via the “Tax Stats” option on the IRS home

page, provides over 1,400 downloadable spreadsheet files

containing all of SOI’s current and recent publications. At

present, close to 200,000 files are downloaded monthly

from Tax Stats [11].

The AGI classes include the following: Under $20,000;

$20,000 under $30,000; $30,000 under $50,000;

$50,000 under $75,000; $75,000 under $100,000;

$100,000 under $200,000; and $200,000 or more.

There is also an “all returns” column with total numbers

for each tax category.

The following are some of the 57 income and tax

categories reported on our individual income tax data by

State tables: number of returns, number of exemptions,

adjusted gross income (total and components), total

itemized deductions (total and components), total

credits (total and components, including the earned

income credit and the child care credit), and tax

liability, taxes due, and overpayments.

Other electronic media products are available from SOI

on magnetic tape, CD-ROM, diskette, and files sent via

e-mail. These products include the Individual PublicUse Microdata File (for which taxpayer identifiers have

been removed); Exempt Organizations and Private

Foundations Microdata Files (whose returns are open to

the public); the Corporation Source Book ; individual

income tax return data shown by State, county, or ZIP

code; and individual migration data shown on either a

State or county basis. SOI’s Statistical Information

Services Office has staff available to facilitate the

dissemination of SOI data, as well as to answer

questions about the data [12].

County Income Data

These data are based on the population of returns from

the IRS IMF system. They are presented in a table, by

total “money income” (a Census Bureau income

concept), adjusted gross income, wages and salaries,

dividends, interest income, gross rents and royalties,

number of returns (which can be used to approximate

the number of households), and number of personal

exemptions (which can be used to approximate the

population).

The data are presented by county

(including State totals) and are available for 1989-2000

for the entire United States. A sample may be viewed at

www.irs.gov/taxstats. As in the previous example, go to

“Data by Geographic Area” and click on “County

Income.”

IRS Locality Data

Of all the data products available from SOI, individual

taxpayer data by geographic area are among the most

frequently requested. Some of the State data are

available online; most of the other geographic data are

described online but must be obtained directly from

SOI. The following summarizes the types of electronic

locality data available and the particulars about each

file:

ZIP Code Area Data

Statistics are available for Income Years 1997 and 1998

on CD-ROM. The file is organized into 18 columns.

Selected income and tax items are tabulated by State,

ZIP code, and size of AGI. The AGI size classes

included in this file are: Under $10,000 (which includes

deficit returns); $10,000 under $25,000; $25,000 under

$50,000; and $50,000 or more. Data items include the

number of individual income tax returns; the number of

personal exemptions; adjusted gross income; salaries

and wages; taxable interest; earned income credit; total

tax; number of returns with Schedules C and F and

number of Schedules C and F; and number of returns

with Schedule A and amount of Schedule A deductions,

by State and 5-digit ZIP code. Examples of the 1997

and 1998 data are viewable from the Tax Stats web site,

under “Data by Geographic Areas” as noted earlier,

along with ordering information. Data for 1991 are also

available at no charge at the same location on the

Internet site.

Individual Income and Tax Data, by State and Size of

Adjusted Gross Income, Tax Years 1997-2000

These tables present aggregates of all returns filed and

processed through IRS’s Individual Master File (IMF)

system for Calendar Years 1997-2000. Classification

by State was usually based on the taxpayer’s home

address. However, some taxpayers may have used the

address of a tax lawyer or accountant or the address of a

place of business. These tables are available through

the IRS web site, www.irs.gov, by selecting “Tax Stats”

in the upper left-hand corner, then selecting “Statistics

by Topic.” Under that heading, select “Individual Tax

Statistics,” then select “State Income” under the heading

“Data by Geographic Areas” [13]. The tables shown are

an expanded version of Table 2, which appears in the

SOI Bulletin every spring, and include additional

individual income and tax items, as well as seven

adjusted gross income (AGI) size classes. All are

viewable at the Internet site.

State-to-State Migration Data

These data show migration patterns by State for the

entire United States, including inflows and outflows,

2

and are based on year-to-year changes in the addresses

shown on the population of returns from the IRS IMF

system. The data include the number of returns, the

number of personal exemptions, total adjusted gross

income (starting with 1995-1996), median adjusted

gross income (starting with 1995-1996), total money

income (for years 1992-1993 through 1995-1996), and

median total money income (for years 1992-1993

through 1995-1996). The data for each State are

represented by two files: an inflow file and an outflow

file. The inflow file shows all the above data for the

total number of returns “entering” the State (i.e., the

taxp ayer resided in the State in the second year, but not

in the previous year), as well as a migration breakdown

of each tax item for each State of origin, in descending

order. The outflow file shows the exact opposite for

each State, depicting the number of returns leaving a

State, as well as the destination States. The State-toState migration data are available for 1989-2001. Click

on “State to State Migration” at the same site path

detailed above to view a sample of the data and for

information on how to obtain them.

which show drastic changes in population over recent

years.

County-to-County Migration Data

Also based on year-to-year changes in the addresses

shown on the population of returns from the IRS IMF

system, these data show migration patterns by county

for the entire United States, including inflows and

outflows. The data include the number of returns, the

number of personal exemptions, total adjusted gross

income (starting with 1995-1996), median adjusted

gross income (starting with 1995-1996), total money

income (for years 1992-1993 through 1995-1996), and

median total money income (for years 1992-1993

through 1995-1996).

Hamilton County, OH, is the central county of

the Cincinnati Consolidated Metropolitan

Statistical Area (CMSA, a Census Bureau

concept). For over 15 years, the commission

has been using IRS county-to-county migration

data to report on population and income trends

in their area.

The commission’s report,

“Spreading Out: The March to the Suburbs,”

shows population changes and migration to and

from Hamilton County, OH, during the period

of 1984-1997 [14]. (See Chart 1.)

The county-to-county migration product is also arranged

by State, with each State represented by an inflow and

outflow file. The county migration data show each

county alphabetically, followed by the counties of origin

(inflow file) or the counties of destination (outflow file).

This product is available for 1984-2001. A sample is

viewable by clicking on “County to County Migration”

at the same location as noted above, which als o has

ordering information.

The commission was charged with this

assignment because Cincinnati experienced a

significant decline in population even though

the regional economy was strong. The goal of

the report was “to create a long-range,

comprehensive, countywide plan to achieve

optimal

sustainable

development

and

redevelopment in Hamilton County, while

identifying the county’s growth opportunities

in the context of the region.”

Some Customers and How They Use Our Locality

Data

IRS locality data customers are using the various

geographic products in a variety of ways. Some

examples include: the media reporting on population

and moving trends; businesses conducting research on

income trends in localities to conduct their own

business; universities studying population or income

changes; and State and local governments examining

how their tax bases are changing.

A majority of the users of these data are “regulars”-they usually order the most current data every year,

either to be included in longitudinal studies or to offer to

their clients. Below are examples of how three of our

regular customers use the locality data:

•

Practical Applications of IRS Locality Data

The Hamilton County Regional Planning

Commission, Hamilton County, OH

This report examines growth trends in

Hamilton County, population movement

between the county and the other Cincinnati

CMSA counties, interstate migration patterns,

average household size of migrants and nonmigrants, per capita income of migrants, total

net income flows due to migration, and

migration patterns from one metropolitan area

to another. All of this can be gleaned from the

IRS county-to-county migration data.

The locality or geographic data that SOI makes

available online or through its SIS office has many

practical applications. In some cases, demographers are

studying trends in migration. These data may be used

for academic research, for Government studies, or for

private industry. Most frequently, the data are used for

newspaper articles on moving trends, popular

destinations for the wealthy, and areas of the country

3

The detailed analysis had four conclusions.

First, Hamilton County is losing population

because people are physically leaving the

county, not because the death rate exceeds the

birth rate. Second, residents who leave the

county are generally going to neighboring

counties within the Cincinnati CMSA. Third,

the typical non-migrant of Hamilton County

generally has a higher income and larger

household. Finally, the mo vement of people

away from Cincinnati is “a trend, and not a

fluke.” (See Map 1.)

•

Philadelphia. The City Controller is elected to

a 4-year term midway between the elections of

the Mayor and City Council to encourage a

measure of independence from the officials

whose expenditures the Controller's Office

must audit.

One of the many services the City Controller’s

office provides is the Preferred Place Index

(PPI). The PPI includes data on economic,

social, and government trends, such as city

wage and tax revenues, construction permits,

migration trends, air quality, crime rates, and

infant mortality. This index provides a basis

for comparing a broad range of statistics on

Philadelphia from year to year. It is generally

considered a way to track the city

government’s performance.

SMR Research Corporation, Hackettstown, NJ

SMR is a business research firm that studies

consumer financial services markets and the

companies that participate in them. They are

the nation's largest publisher of strategic

research studies on consumer financial topics

and also provide consulting, electronic data,

and statistical services.

One of the measures in the PPI is net migration

within the Philadelphia Metropolitan area.

Recognizing the important role that immigrants

play in the growth of many American cities, a

measure of the net number of immigrants in

Philadelphia was included. Using IRS county

migration data, the Controller’s office

identified those migrants with foreign

addresses as either their origin or destination

addresses and calculated the net number of

immigrants. This factor was a weighted one

because it is a subset of the total overall

migration trend numbers and because of the

significant potential for immigrants to fail to be

counted by IRS data due to low income levels

and other limitations [16].

SMR provides corporations with data and

analysis on U.S. consumer loan markets,

financial services companies, and consumer

wealth and credit risk by geographic area [15].

SMR uses SOI data for the nation with county

and ZIP code to estimate the personal savings

rate (PSR), a calculation commonly used in

Economics. According to Stuart Feldstein, the

president of SMR Research Corporation, “The

percentage of people who report taxable

interest income is a fine surrogate for the

percentage of people who happen to have

money in the bank.” Mr. Feldstein continues

to say that, tracked over time, this figure is as

useful as the Commerce Department’s PSR,

which is used by virtually all economists.

The three examples above show how our locality data

can track trends in population, income, financial

markets, and even a city’s likelihood to attract and

retain residents. The media also use IRS locality data

regularly when reporting moving trends and

highlighting desirable communities.

For SMR, the county-level income data serve

two purposes. They show mean incomes by

county per capita (exemption) and by filer.

This shows, at a local level, where incomes are

rising, where they are falling, and by what

amounts. SMR also uses the county fields of

interest and dividend income, which Mr.

Feldstein says are very valuable to banks and

investment companies.

•

Innovations for the Future

Future improvements of our locality data focus on

making current data available sooner. As requests for

the ZIP code data continue to rise, the SOI Division will

focus on releasing the data more quickly. The 1999 and

2000 ZIP code files may be available by the end of 2002

and the beginning of 2003, respectively. The 20012002 County-to-County, State-to-State, and County

Income Data files are expected to be available around

the beginning of 2003.

Office of the City Controller, Philadelphia, PA

The City of Philadelphia, Office of the City

Controller, is the sole auditing agency of

Philadelphia City government. This role was

expanded in 1965, also making the City

Controller the auditor for the School District of

The Division also plans to have more “user-friendly”

locality data historical products. Customers who now

4

need to order separate files for longitudinal studies will

find it easier to order one product, which contains

several years of data, including the necessary

documentation to interpret the changing file layouts

(especially useful for the earlier years of the locality

data).

Organizations, 1974-1987; 1986-1992; and

1989-1998, Publications 1416, Internal Revenue

Service.

The vast majority of SOI’s customers receive their data

via the “Tax Stats” web site. Plans continue to improve

the search engine and make the web site even easier to

use. The web will also provide a way to let more of the

public know about our locality data.

[11]

The web address for SOI is www.irs.gov/taxstats.

There is also a direct link to our web site from the

Federal Government’s “One-Stop Shopping for

Federal Statistics”: www.fedstats.gov .

[12]

For more information on SOI products and services,

including SOI locality data, contact:

Statistical Information Services

Statistics of Income Division

PO Box 2608

Washington, DC 20013-2608

(202) 874-0410

sis@irs.gov

[13]

At this location, the Tax Year 2000 expanded

unpublished version of the individual income tax

return data by State follows five tables for Fiscal

Year 2001 from the Internal Revenue Service

Data Book.

Notes and References

[1]

For further information on the Statistics of

Income Program, see Petska, Tom, “’Statistical

Information from Administrative Records in the

Federal Tax System,” Special Studies in Federal

Tax Statistics: 2000-2001, Publication 1299,

Internal Revenue Service. See also the SOI web

site: www.irs.gov/taxstats

[2]

See, for example, Statistics of Income Bulletin,

Winter 2001-2002, Publication 1136, Internal

Revenue Service.

[14]

Nolan, Christine (1999), “Spreading Out: The

March to the Suburbs,” Hamilton County Region

Planning Commission, Cincinnati, OH.

[3]

See, for example, Statistics of Income--1999,

Individual Income Tax Returns, Publication 1304,

Internal Revenue Service.

[15]

For explanations of SMR Research Corporation’s

various products on U.S. consumer loans and

other financial topics, see www.smrresearch.com.

[4]

See, for example, Statistics of Income--1999,

Corporation Income Tax Returns, Publication 16,

Internal Revenue Service.

[16]

“The City Controllers Preferred Place Index,”

www.philadelphiacontroller.org.

[5]

See, for example, Source Book of Statistics of

Income--1999, Corporation Income Tax Returns,

Publication 1053, Internal Revenue Service.

[6]

See, for example, Data Book 2001, Publication

55B, Internal Revenue Service.

[7]

See, for example, Special Studies in Federal Tax

Statistics: 2000-2001, Publication 1299, Internal

Revenue Service.

[8]

See, for example, Statistics of Income-Compendium of Federal Estate Tax and Personal

Wealth Studies, Publication 1773, Internal

Revenue Service.

[9]

See, for example, Statistics of Income-Compendium of Studies of International Income

and Taxes, 1984-1988, Publication 1267, Internal

Revenue Service.

[10] See, for example, Statistics of Income-Compendium of Studies of Tax-Exempt

5

Chart 1

Hamilton County Total Net Migration, 1984-1997

2,000

1,000

0

-1,000

Net Migrants

-2,000

-3,000

.

-4,000

-5,000

-6,000

-7,000

-8,000

-9,000

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

Other US Counties

-3,169

-3,316

-146

-312

-272

-919

-10

1,037

666

744

-1,857

-1,488

-1,231

1997

-228

CMSA Counties

-3,134

-3,549

-4,774

-5,182 -5,304

-4,808

-5,066 -4,231

-4,570

-5,806 -5,742

-6,032

-5,906

-6,728

Source: IRS Statistics of Income Division, 1999, prepared by Christine Nolan and the

Hamilton County Regional Planning Commission.

Map 1

20,706

Source: IRS Division of Income Stati

INDIANA

REGIONAL PLANNING

COMMISSION

12,279

OHIO

Butler

Warren

20,050

6,871

-70,832

Hamilton

Source: U.S. Internal

Revenue Service.

Dearborn

2,407

3,193

Boone

Kenton

2,452

368

Ohio

Clermont

1,598

Campbell

Brown

Gallatin

65

NET MIGRATION

LOSS FROM

HAMILTON COUNTY

TO OTHER CMSA

COUNTIES

1984-1997

Note: The numbers in the

bars represent only

exchanges between

Hamilton County and other

counties in the Cincinnati

CMSA. Those who moved

to or from other regions of

the U.S. are not included

on this map.

460

383

LEGEND

Grant

Pendleton

KENTUCKY

Counties

States

N

20.0 mi.

6