26 U.S. Code § 7434 - Civil damages for fraudulent filing of information returns. If any person willfully files a fraudulent information return with respect to payments purported to be made to any other person, such other person may bring a civil action for damages against the person so filing such return.
If you suspect this employer of deliberately (and repeatedly) filing fraudulent 1099s, you can report them to the IRS. They will want to hear from someone like you who has inside knowledge as a (former) employee. You can also claim a reward (a percentage of the money they scammed, I think). To report the fraudulent tax filings, fill out form 3949A and then form 211 (to claim any reward). Given how egregious this employer of yours has been, it might be worth the effort.
See IRS page on reporting suspected tax fraud
"Report suspected tax law violations: Use the Form 3949-A, Information Referral if you suspect an individual or a business is not complying with the tax laws. You can submit Form 3949-A online or by mail. We don't take tax law violation referrals over the phone. We will keep your identity confidential when you file a tax fraud report."
Hello,
I have the same issue. I have not received IRS letter yet. I am just wondering how did you solve this issue?
Did IRS accept your written statement in 2017?
Thank you
Yes, the IRS did investigate and sent me a notice stating that I owe $0 in taxes. If you encounter a similar situation, you might receive a CP2000 notice. This notice will give you three options. If I remember correctly, the options are: 1) Agree and pay, 2) Disagree and… 3) Authorize someone else to represent you in dealings with the IRS. I chose to disagree and sent a detailed explanation of the situation.