May an employee be paid via a standard 1099?

Author: Ryan F. Donovan

No. An employee should always have proper taxes withheld and a W-2 should be the tax document issued. Unless a person being paid is truly a contractor as the IRS defines it, issuing that person a 1099 and not withholding taxes is usually illegal. IRS or US Department of Labor audits that uncover an employee being improperly classified can lead to costly penalties and amendments.