They can't send your information outside without your consent, or indeed send it to anyone without your consent; since the W-2 has protected information on it (e.g. you social security number), they could be exposing themselves to liability by doing this. But they can tell you that if you don't use their tax service, you will be terminated--using their tax service can be made a condition of employment. Then you can decide whether to go along or to look for a different job.