I recently applied for a credit card that my wife has. I was responding to a great offer that I believe this credit card company sent me based on my good credit score and so on. When I applied online, they told me to call a number because they needed more information. When I did, they had me wait 20 minutes and then came back and told me they needed proof of my income tax return. This is really strange. The only thing I could think of is that they saw in their company databases that I discharged a debt with them via Chapter 7 over a decade ago and are demanding more info of me than they would anyone else. Does this sound accurate? Can anyone confirm that this is a thing? Either that or based on my surname they surmised that there is no way I make the income I say I do. Again, can anyone confirm this as a practice? I have another credit card with another company that also got discharged. They did not put me through this. I am based in the United States by the way.
A number of lenders - American Express and Discover are most notable for this in recent years - may ask or require you to verify your income via an IRS 4506-T form.
Typically, they'll do this if they're uncertain about your credit profile in some way; a high claimed income, a history of bankruptcy, a low credit score, a thin credit file, etc.
Because the information comes directly from the IRS, they can trust the income more than your self-reported income you entered into the credit card application. (Yes, you can lie to the IRS, but that's a felony.)
As you have a history of bankruptcy - with this lender - I'd suspect that's why they're a little leery of you. It's up to you whether the new card is worth the invasion of privacy here.
While bankrutpcy does indeed fall off your report after about a decade, depending on type, no law forbids individual lenders from keeping their own records on you. American Express is noteworthy for having a very long memory for their "blacklist", and they may make you pay them back before they'll issue a new card.