Attention FAE Customers:
Please be aware that NASBA credits are awarded based on whether the events are webcast or in-person, as well as on the number of CPE credits.
Please check the event registration page to see if NASBA credits are being awarded for the programs you select.

CPAs See Proposed W-4 as ‘Invasive’ and a Burden on Employers

Chris Gaetano
Published Date:
Aug 22, 2018


A new Form W-4, Employee’s Withholding Allowance Certificate, proposed by the IRS in June, asks for potentially sensitive personal financial information, leading some preparers to view it as a needlessly complicated violation of taxpayer privacy.

The draft form asks for most of the same information as the current version—but also for nonwage income, such as interest or dividends; itemized deductions; tax credits; and income from other, lower-paying jobs.

“I don’t think, especially in this day and age of privacy concerns, that you want to have that information given to your employer,” said Barry S. Kleiman, a member of the NYSSCPA’s Taxation of Individuals Committee. And while asking for such information is intended to allow employers to make more accurate withholdings, he noted that it also raises concerns about identity theft and cyberattacks.

Although including this information is technically optional, the draft form does not make this clear, Kleiman added, and many people will just assume that they need to fill out all the lines on the form. He pointed out that there’s no longer a line for the total number of allowances, so employees may fill in the information because they think the employer needs it to calculate their withholding.

George R. Rubino, chair of the Taxation of Individuals Committee, agreed that people unfamiliar with the Form W-4 may just fill in the information without understanding that it’s optional. He suggested that, in lieu of supplying their personal financial information, employees could determine their withholding on their own, using an IRS calculator at, or hire an accountant to calculate it for them.

But this alternative speaks to another criticism, that the form has become too complicated for the layperson to understand. James P. Bressingham, chair of the Society’s Relations with the Internal Revenue Service Committee, noted that the W-4 should be a relatively simple affair, but the draft proposal turns it into something that employees could navigate properly only with the help of a CPA.

“How will a normal taxpayer get to that [information] without having someone calculate it for them?” he asked. “That doesn’t make any sense. You’d have to calculate your whole return for the year, before filling out the W-4, which, to me, is ridiculous.”

The proposed form wouldn’t be good for employers either, according to Daniel Lahage, another member of the Taxation of Individuals Committee, who processes payrolls for small business. Essentially, the new form shifts the burden of calculating the correct withholding amount to the employer, and that’s not always easy, he said. Given the complicated factors involved—such as whether someone qualifies for a certain credit or deduction—as well as the substantial amount of personal information requested, he noted that “they’re basically calculating their entire tax return.”

Furthermore, he added, the request is “really invasive.” He explained that “It is not the employer’s business if the employee has substantial savings or investment income; they want to throw in your spouse’s income … so the employer can figure out the withholding, [but] it’s not their business what your spouse is making. … It’s a burden on the employee and the employer.”

Rubino said that the Taxation of Individuals Committee is planning to write a comment letter on the proposed new form.

Click here to see more of the latest news from the NYSSCPA.