Asked for tax returns during interview? Legal/Illegal?
April 23, 2009 6:50 PM   Subscribe

Can a prospective employer ask for my previous 2 years tax returns?

I am interviewing with a company for a prospective job. I was just asked for my earnings from the last two years. Assuming that he would like to see a tax return. Is this legal? I cannot believe I can be obligated to provide this to a prospective employer.

Can a current employer ask for tax returns? I would imagine if this was legal it would be standard practice. No?
posted by thinktwice to Work & Money (19 answers total) 1 user marked this as a favorite
Did they explicitly ask for your tax returns, or are they asking for your salary history for the last two years? What kind of position/industry is this for?
posted by swngnmonk at 6:58 PM on April 23, 2009

From your question: Assuming that he would like to see a tax return.

Which is it? Did he ask? Or did you assume? There's a big difference.
posted by The Deej at 7:00 PM on April 23, 2009 [3 favorites]

I can't imagine a job where that would be a requirement. If it was a security job, they wouldn't have to ask!

I have no idea what jurisdiction you're in or what laws apply, however it would be perfectly legal to ask where I live, the illegal matters apply to discrimination. However, any person asking wouldn't get many applicants, they'd be told to shove it.

'Course, I live in a country where there's slightly less disparity in perceived power between employers and employees.
posted by wilful at 7:00 PM on April 23, 2009

This information is highly personal, why do they need to know? what will they do with the data? will they store the data? if so for how long? what safeguards are in place for security? will they pass the data on to a third party?

I can't possibly think why the need the data- only to verify that you were previously employed as you claim- Tell them to get stuffed.
posted by mattoxic at 7:06 PM on April 23, 2009 [1 favorite]

Not sure where you're located, but in the United States it's illegal to ask certain questions of a perspective employee, such as:

- Are you married?
- How much does your spouse make?
- Are you financially solvent/what is your financial state?
- Do you own or rent your home?

These and other questions are not appropriate unless they pertain to the job at hand, and can get an employer sued. These particular questions are ones that can also be ascertained by looking at your tax returns. I don't think, then, that it's illegal to ask, but you'd be voluntarily giving up information that they're not allowed to ask for directly (again, in the US.)

However, the prospective employer has not asked for your tax returns; you are merely assuming that he wants to see them. Asking for your "earnings" is an entirely different question; he's trying to figure out how much he can get away with offering you. He's presumably asking for a salary history covering the last two years.

This is the kind of thing employers ask to see if they can pay less than they plan to, or to see if you're out of their budget to hire, before getting to the point of (and putting in the legwork leading up to) an offer. Some people answer honestly (or even put it on their resume), some people lie about it based on what they think (or know) the prospective employer wants to hear, and some people refuse to answer (sometimes tactfully, sometimes not.)

I won't go further beyond the scope of your question and offer advice on whether you should offer this information or not, except to say that I personally wouldn't turn over a tax return to a prospective employer unless it was for a very lucrative position very much in the public eye, where the return would be used as part of a larger background check to ascertain whether I had cheated on my taxes (assuming my ability to do the job would be jeopardized if it came out later that I had, such as a position in politics or CEO of a fortune 500 company.) Outside of that edge case, I'd personally walk away from such a request.

(again, this is assuming US locale, so this might all be wrong for your case.)
posted by davejay at 7:10 PM on April 23, 2009

1. It's an IT sales position.
2. I live in California
3. The job is in California with plenty of international travel
4. When I said assuming I meant that the only way to really verify earnings is through a tax returns.
5. I suppose the question should be:
a)Is it legal for a prospective employer to ask for my tax returns?
b) Is it legal to ask for my earnings?
posted by thinktwice at 7:11 PM on April 23, 2009

Are you sure they're not just asking how much money you make? Most employers want to know that to know how reasonable your salary request is going to be.
posted by radioamy at 7:14 PM on April 23, 2009

Legal or not, I wouldn't do this, as it potentially wipes out any bargaining power you might have over salary. Oh, and it's none of their business.
posted by zippy at 7:16 PM on April 23, 2009

They aren't asking for your tax returns. They aren't going to verify your earnings. They just want an idea of how much you made to know what to pitch to you salarywise, I promise.
posted by soma lkzx at 7:16 PM on April 23, 2009 [3 favorites]

I have been asked to provide a W2 as prood of what my stated last salary/commission earnings were.

Not saying it was or wasn't legal though, just that factually, I was asked to show one. And I'm guessing a W2 is different that a whole return.
posted by mazienh at 7:17 PM on April 23, 2009

Ah, that narrows it down! My advice: they're not going to ask for your tax returns, and they have no legal way of verifying your salary history without at least written permission to do a credit check (or you being foolish enough to volunteer documentation of any kind) so it's really your word they have to go on.

However, remember: they're asking this to figure out where (or whether) to start salary negotiations, not to verify your salary history. They hope you'll be honest, and many people are -- and many are not. Those that are not often inflate their salary history to raise the place where negotiations can begin, but sometimes price themselves out of negotiating at all when they do so -- and so do people being honest, if they made too much money prior.

My advice, if you want it: choose one of these:

Be honest, and let it work itself out, aka the easy way.

Figure out how much you want, then state a salary history that shows some growth over two years (implying that you've gotten a raise or two) but is at parity with what you want, aka the sneaky way.

Be honest, and say "Before we talk about how much I've made in the past, I'd like to know how much this job might offer me in the future", aka the hardened negotiator way.
posted by davejay at 7:23 PM on April 23, 2009

It's an IT sales position.

They're asking to verify that you're not lying about past sales accomplishments. The assumption is that you're on commission and your earnings reflect how much business you brought in. I understand it's standard practice in the field. Having said that, you're not obliged to share the data with them. But it's not unusual to ask.
posted by GuyZero at 7:59 PM on April 23, 2009

I should add that the enterprise IT salespeople I've worked with have mentioned that they have done this, i.e. shared their tax slips to prove previous income. Not that you have to.
posted by GuyZero at 8:00 PM on April 23, 2009

The problem is that I don't currently sell IT equipment. I'm in finance currently. I have an extensive and very varied sales background. Like a chameleon.
posted by thinktwice at 9:28 PM on April 23, 2009

My current job did a credit check. I assumed it was for the same reason the bar did, to see if I was reliable-like.
posted by Pax at 10:10 PM on April 23, 2009

It is common, and as far as I know legal, to ask commissioned salespeople to produce W2s. It is uncommon, and stupid, to ask to see tax returns -- they are unreliable and a danger inadvertently to learn information about family status that it unlawful to seek in the employment process.
posted by MattD at 5:43 AM on April 24, 2009

Just give them the info by email or letter. If they want more documentation; they'll ask. Earnings can be verified by your previous employer(s), with your permission. Or you can send them a W2.
posted by theora55 at 7:38 AM on April 24, 2009

They can also (with a special form), pull a list of people who have sent you w-2 and 1099 forms from the IRS. When you apply for a mortgage, this is one the forms they have you fill out, but I think the only job where they would do this as a matter of course would be collections or jobs like it.
posted by fiercekitten at 9:02 AM on April 24, 2009

In Virginia there is no law that would prevent an employer from asking for your salary history or documentation supporting it. Nor is there any law that would forbid a company from basing an employment decision on your willingness to provide that information. Asking for your W-2 would be a different thing than asking for your tax returns. You could make a case that some information on your W-2 (such as the rate at which you withhold tax) has a potentially discriminatory use -- it could be used to discriminate against married people or people with children, which is specifically forbidden.

If there is a state that forbids asking for salary history it would be California, but I don't believe that anyone would ban the question. Proving it in the form of a W-2 or a 1040 might be a different matter.
posted by Lame_username at 10:35 AM on April 24, 2009

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