In addition to advice regarding only opening the output files once, an extra speed increase could be gained by using unpack instead of substr:

use strict;
use IO::File;
$|++;

my $sourcefile = 'data.txt';

my @possibletargets = qw(1 2 3 4 5);

my %tgthandles = (); 

foreach my $target (@possibletargets) {
    my $fname = 'form_' . $target . '_record.txt';
    $tgthandles{$target} = IO::File->new(">>$fname");
}

open(REPORTS, $sourcefile);

while(<REPORTS>) {
    my $line = $_;
    my $id = unpack("A1A*", $line);
    my $fh = $tgthandles{$id};
    print $fh $line;
}

close(REPORTS);
    
foreach my $key (keys(%tgthandles)) {  
    $tgthandles{$key}->close;
}
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