That really doesn't have any thing to do with a 1099. EC are getting fined for hiring people to work and 1099ing them at the end of the year. The IRS rule of thumb is if you hire someone and you tell them when and where to show up, how you want them to do the work and supply tools and material they are your bonified employee and you must follow the correct tax laws. I see framing contractors do this all the time and never get in trouble and there guys laugh and throw away the 1099 at the end of the year. Ether they don't realize or don't care that they are not paying in any thing to SS but those of us that do pay our taxes are now carrying the burden of them not paying their share.
If they’re throwing away the 1099s they receive, they are likely not paying any income tax at all, much less FICA.
However, the payer must send a copy of the 1099 to the IRS. It should be a simple matter for the IRS to find missing taxes from 1099 income. Well, simple for you or me, maybe not for the gubberment.
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