In another thread, I talked about this problem. I requested to be 1099'ed from a chimney company for the purpose of naturalizing my undocumented wife and they agreed. They cut me 6 checks and I copied each. Each check had the company name at the top and "1099-mason" written in the memo at the bottom of the check. They apparently made me look like I was independantly contracted by them as a mason (although I was actually under their employ).
I then requested a note stating my position there, salary, and start date. They initially agreed and then started acting shady about getting this to me and they eventually fired me. It's become clear that this endeavor would have likely opened them to exposure for tax misconduct and instead of just talking with me they contrived reasons to terminate me and just played games with me.
With some research I found that there was a task for created through the NYS department of labor and they are really going after employee misclassification (e.g., making someone look like they were independantly contracted as opposed to being under the complany's employ).
You see, companies get away with, among other things, not paying social security, insurance, sick leave, overtime, workmen's comp, various taxes by 1099'ing employees. So 1099 is under considerable scrutiny through this inter-agency initiative.
It appears that I'm in the position to really screw them if I wanted to. If I appear to be an independant contracter for them, I'd have to be insured or they'd be liable for hiring an uninsured indep. contractor. There are other possible angles for triggering an audit as well.
Personally, I feel uncomfortable with this whole thing. They seemed to have had good intentions by trying to help me with the 1099. On the other hand, my dismisal was done in an indirect, arrogant and most shady fashion. If anyone has an informed and hopefully interesting oppinion on this situation, I'd love to hear.