The tax administrator's demographic dilemma

The Internal Revenue Service’s job is difficult enough, particularly during filing season, when millions of citizens are reaching out all at once for support. But now, for the first time in history, tax administrators must support five different demographic segments throughout the year, each with drastically different needs, levels of comfort with technology and expectations:

• The Silent Generation (birth years 1928-1945)
• Baby Boomers (1946-1964)
• Generation X (1965-1980)
• Generation Y (1981-1996)
• Generation Z (1997-Present)

Let’s take a closer look at each of these generations and outline the experiential expectations associated with each.

The Silent Generation

My parents were part of the silent generation. They never owned a cell phone—always a landline—didn’t subscribe to the internet, and basic cable TV was more than enough. All of their interactions were either in-person over the phone or via U.S. Mail. This does not mean the entire demographic is digitally unengaged, but the majority are more comfortable with older methods of communication. As a result, tax administrators need to continue operating brick-and-mortar venues and providing call centers for telephone support. They must also make many initial outreaches to the taxpaying public through the mail, requiring the means to handle incoming and outgoing correspondence.

Generation Z (or “Zoomers”)

Now, we turn to the youngest demographic—the oldest Zoomers are still under 30. They are often described as “digital natives,” but “social media natives,” or “video game natives” might be more accurate. In any case, this demographic is very comfortable with mobile technology and communication methods, usually fluent in “netspeak,” (a combination of acronyms (e.g., LOL = laughing out loud) and emojis). What federal agencies need to understand about Zoomers is that the last things they want to do is talk to someone or correspond by mail. They much prefer digital engagement, and perhaps a netspeak-written tax return—I jest on the last of course. (Or as the Zoomers might say, “LOL, j/k.”)

Generation Y

Like Zoomers, Generation Y, or millennials, are also called “digital natives.” They also have a proclivity for digital engagement. All of my children are millennials, so I have firsthand knowledge of their preferred engagement channels, and I can confirm the consensus: Their engagement channels of choice —in order of preference—include 1) direct digital communication; 2) chat functions, such as texting and instant messaging; 3) email; and 4) voice calls, preferably on mobile phones.

Generation X

Generation X, often referred to as the “forgotten,” “latch-key” or “MTV” generation, is the smallest—sandwiched between Millennials and Baby Boomers. Gen Xers were the first generation to come of age with personal computers in the home, along with a commercialized internet. As such, they are digitally savvy and lean toward digital engagement. Having been raised by older Boomers and the Silent Generation, though, they will readily pick up a phone if they need to; U.S. Mail ugh!To get them fully engaged digitally, robust content and an easy-to-use digital experience are essential. They have no particular digital loyalty.

Baby Boomers

I saved the Baby Boomers for last, as they are—marginally—the largest demographic, but also because they were the children of the Silent Generation and the parents of Millennials. As a result, this generation is uniquely comfortable moving across all engagement channels. Boomers grew up with AM/FM radios, black and white televisions, rotary phones, and brick-and-mortar establishments. However, as they grew up and grew older, they experienced a virtual technological explosion. The Boomers lived through the rise of personal computers, laptops, cable TV, MP3 players, digital music, word processing and spreadsheets. They moved from writing letters and licking stamps to sending email, texting from mobile phones, digital banking and the electronic filing of tax returns. Boomers today happily use technologies that did not exist as they were growing up. This generation is equally comfortable with landline phones and text messaging, websites, brick-and-mortar venues and push come to shove, the U.S. Mail.

Accounting for special needs

Age, however, is not the only factor that complicates things for tax administrators. Roughly one in five Americans speaks a language other than English at home. About 5% of Americans have a vision disability, and almost 6% have hearing difficulty. Approximately 50% of American adults can’t read a book at the 8th grade level.

Therein lies what I call the “Tax Administrators’ Demographic Dilemma,” supporting five different generations concurrently, along with segments of the population who have special needs with channel, response time and personalization expectations.

Thankfully, though, there are best practices and steps these administrators and agencies can take to address these challenges. I will detail those in upcoming blog posts. In the meantime, as we come to the end of tax filing season and tax administrators begin the process of analyzing next steps for 2024, it is imperative they factor in the unique traits of each of these five demographics to ensure they disregard no stakeholder group.

The process will be complex and will require multifaceted, interoperable solutions, but the importance of going about this the right way is imperative to ensure a seamless customer experience and healthy federal financial system.

Learn more about CGI Federal's work at the U.S. Department of the Treasury. 

Read part two of this series