What Obama's Tax Revelations Mean To You

Barack Obama refuses to reveal his underwear preference. ("Whichever one it is, I look good in 'em!" is all he would tell Us Weekly.) But when it comes to personal financial information, apparently this U.S. presidential candidate is not as shy.

Not at all. Senator Obama released seven years of his tax filings on March 25, which disclosed income of “$1.65 million in 2005 and nearly $1 million in 2006” for his family and “charitable contributions of $137,622” during the same period, according to The Los Angeles Times. Some see the move as a challenge to Hillary Clinton, who has not released her tax records. Financial transparency may be important for candidates, but what about the rest of us? Who has the right to ask to see your tax returns? Do you have to comply?

For starters, the Internal Revenue Service keeps your documents private. Well, except to certain government agencies, like the Federal Bureau of Investigation. If you’re being investigated for fraud, the FBI could have your documents subpoenaed. (FBI or IRS agents who peak at your information without authorization, however, face serious penalties.)

Outside of law enforcement, entities that request tax records are often trying to verify your stated income. They may include a real estate agency, loan officer, bank, or business partner. Disclosure is at your discretion. “Many people that you intend to do business with ask for tax returns as a part of due diligence,” says Richard W. Goldstein, partner at Goldstein Jones LLP, a New York law firm that specializes in taxes. Although you cannot be forced to reveal your information, their policies can dictate whether your business request is accepted. In other words, if you choose not to show a realtor your records, they may choose not to show you rental apartments. Think of the request as "a matter of negotiation," says Steven Melnik, a professor of tax law at the Zicklin School of Business at Baruch College. "Ask why the information is needed and see if there are exceptions to a company's policy."