business tax-law court
Tipping competing salon that unjustifiably sued us to IRS for misclassifying their former employees?
<p>We are <a href="https://law.stackexchange.com/questions/47051/what-are-ones-options-if-he-is-incorrectly-listed-as-defendant-in-civil-lawsui">being sued by a competing business salon</a> that in complaint filed with court alleges that their "former employees" conspired with us in stealing trade secrets (a.k.a. customer contact list). In reality their former employees are just our tenants and they will give us 1099 form for fixed rents that we collected. We don't share customers or collect commissions.</p>

<p>Now it turns out that the former employer of our current tenants was giving 1099 and not w-2 forms to them. And probably still is giving 1099 to remaining employees. Yet in court document openly calls them "Employees" and not "Independent contractors".</p>

<ol>
<li>Is there a chance that IRS may look in such cases?</li>
<li>What is the proper way to start process?</li>
<li>Can this tipping be done anonymously?</li>
<li>Does IRS provide awards to tipsters?</li>
<li>Anything that can go wrong with this idea?</li>
</ol>

<p>P.S. I am not looking for legal advice.</p>

<h2>The IRS takes tip-offs from the public and may pay <a href="https://www.irs.gov/compliance/whistleblower-informant-award" rel="nofollow noreferrer">rewards</a></h2>

<blockquote>
  <ol>
  <li>Is there a chance that IRS may look in such cases?</li>
  </ol>
</blockquote>

<p>Yes</p>

<blockquote>
  <ol start="2">
  <li>What is the proper way to start process?</li>
  </ol>
</blockquote>

<p>See the link above.</p>

<blockquote>
  <ol start="3">
  <li>Can this tipping be done anonymously?</li>
  </ol>
</blockquote>

<p>Not if you want a reward. Also, its probably more likely that non-anon tips will be followed up as investigators can seek more information.</p>

<blockquote>
  <ol start="4">
  <li>Does IRS provide awards to tipsters?</li>
  </ol>
</blockquote>

<p>Sometimes.</p>

<blockquote>
  <ol start="5">
  <li>Anything that can go wrong with this idea?</li>
  </ol>
</blockquote>

<p>Well, it's unlikely to help you in your civil trial although you should seek clarification in discovery if the people are employees or contractors. If they are employees then there is an implicit relationship of confidence, if they are contractors that's unlikely to be the case and an explicit NDA may be needed.</p>
