How can I anonymously report a restaurant misclassifying employees as 1099 contractors to avoid taxes - what evidence would I need?

Do you know if they would actually do anything with the report? I've heard the IRS is really backed up and understaffed. Would they even bother investigating a small restaurant?

The IRS does prioritize cases, but worker misclassification is one of their focus areas because it's a common tax avoidance strategy that costs billions in lost revenue. Even for small businesses, they do follow up on credible tips, especially when there's a clear pattern of deliberate misclassification affecting multiple workers. The investigation might not happen immediately due to backlogs, but they do maintain these reports and act on them. The more specific information you provide, the more likely they'll investigate sooner rather than later.

How exactly does that work? Do you have to upload your pay stubs or contracts or something? I don't have any official paperwork since they haven't given me anything.

I'm skeptical. How would a website know the specific details of your work arrangement? Seems like one of those things that just tells everyone they're misclassified to sell some service.

You don't need to upload any documents - it just walks you through a questionnaire about your work situation. Questions like who sets your schedule, who provides equipment, how you're paid, level of supervision, etc. These are the same factors the IRS uses to determine worker status. The assessment is based on established IRS classification rules, not just a generic "everyone is misclassified" approach. You answer questions about your specific work arrangement, and it analyzes based on the control factors the IRS looks at. I wasn't trying to sell anything - it actually helped me understand when I was legitimately misclassified.

Wait, how does this actually work? How do they get you connected faster than just calling yourself? Sounds too good to be true.

This sounds like complete BS. There's no way to "skip the line" with the IRS. They have specific hotlines and procedures for reporting fraud. Using some third-party service isn't going to make any difference except to your wallet.

They don't skip the line - they literally wait on hold for you. The IRS wait times are often 2-3 hours or more these days. The service monitors the hold music and calls you when a human agent actually answers. You're still waiting the same amount of time, but you don't have to sit there with your phone on speaker for hours. I understand the skepticism. I felt the same way until I tried it. The benefit isn't about "skipping lines" - it's about not having to dedicate hours of your day sitting by the phone. For reporting something important like tax fraud, getting through to explain the situation to a human can make a huge difference in how it's handled versus just mailing in a form.

Would the state labor department keep my identity confidential too? I'm concerned about retaliation since it's such a small family business where everyone knows each other.

Yes, state labor departments typically have confidentiality protections for people who file complaints. The investigation would focus on the business practices, not who reported them. They understand the risk of retaliation and generally don't reveal the source of complaints. When they investigate, they'll typically look at records for all employees, not just your situation specifically, which helps protect your identity. I'd recommend checking your specific state's labor department website - many have explicit statements about their confidentiality policies for whistleblowers.

Careful with taking pictures in the workplace though! That could definitely raise suspicion if someone sees you. Maybe just write down the info from the schedule instead?

This is really helpful advice! I'm curious - when you reported the catering company, did you end up hearing back about what happened with the investigation? I'm trying to figure out if I'll ever know whether my report actually led to any action, or if it just disappears into the system. Also, you mentioned documenting communications about the "daily rate" - they mostly just told me verbally that this is how they do things. Should I try to get them to put something in writing, or is my word about what they said good enough for the report?

@0ad6cc600f88 The IRS typically doesn't provide updates to tipsters about investigation outcomes - they keep that information confidential. I never heard back about what specifically happened with the catering company, though I did notice they started properly classifying workers as W-2 employees about 8 months later (could be coincidence, but timing seemed suspicious). For documentation, your verbal testimony is absolutely valuable - the IRS investigates based on credible tips even without written proof. That said, if you can naturally get something in writing without raising suspicion, it would strengthen your case. Maybe ask a question via text about pay schedule or work hours? But don't stress if you can't - investigators are trained to evaluate these situations based on the overall pattern of how workers are treated, not just paperwork. The most important thing is documenting the actual working conditions and control factors while you're still there. Your firsthand account of how they manage the workforce is exactly what investigators need to build a case.

This is really solid advice. I'm wondering though - since I've only been there three weeks and haven't filled out any paperwork yet, would it be better to wait a bit longer to gather more evidence, or should I report it now before I quit? I'm worried that if I wait too long, they might catch on that I'm documenting things, but I also don't want my report to seem weak because I haven't been there very long. Also, when you mention keeping a daily log - should I be writing this down on paper at home, or is it safe to keep notes on my phone? I'm just paranoid about them somehow finding out I'm collecting information.

@c00e85a536a6 Great question about timing! I'd actually recommend reporting sooner rather than later. Three weeks is plenty of time to observe the pattern, and waiting longer risks them becoming suspicious of your documentation efforts. Plus, the IRS and state agencies investigate these things over months - they'll be looking at the business's practices with all employees over time, not just your specific experience. For documentation, definitely keep notes at home, not on your work phone or anywhere they might access. A simple notebook at home where you jot down details each day after work is perfect. Include dates, hours worked, who supervised you, specific instructions you were given, and any conversations about pay/classification. Even a few weeks of detailed observations can paint a clear picture of the control they exercise over workers. The fact that you haven't done any tax paperwork yet actually strengthens your case - it shows they're not following proper contractor procedures. Don't overthink it - your current observations are valuable evidence, and the sooner you report, the sooner investigators can start building a comprehensive case.

This is all really helpful information! I'm feeling more confident about moving forward with reporting this. One thing I'm still unclear on though - when I submit Form 3949-A anonymously, should I include as much detail as possible even if some of it is based on conversations I overheard or assumptions about their motivations? For example, I heard the owner mention to his brother (who also works there) something about "keeping costs down" when they were discussing the 1099 arrangement. I don't want to hurt my credibility by including things that aren't 100% factual, but I also want to give investigators the full picture of what seems to be happening. Also, do you know if there's a way to follow up on an anonymous report later if I remember additional details or witness more problematic behavior after I quit?

@4e59addc0d79 Great question about what to include! You should definitely stick to facts you can verify - what you directly observed, experienced, or heard firsthand. The overheard conversation about "keeping costs down" is actually valuable evidence if you can describe it factually (when/where it happened, who was involved). Just present it as what you heard rather than making assumptions about their motivations. Focus on concrete details: specific work hours, how tasks were assigned, who supervised you, equipment provided by them, dress codes, scheduling requirements, and payment methods. These objective facts paint the picture investigators need without requiring you to interpret intentions. For follow-up, anonymous reports are tricky to update since there's no case number tied to your identity. Your best bet would be to file a supplemental Form 3949-A if you gather significant additional evidence. However, once you quit and file your initial report, you'll have done your part - the investigation will look at their practices with all employees over time, not just what you witnessed. The key is being thorough in your initial report while sticking to verifiable facts. Your detailed observations from three weeks are already strong evidence of misclassification patterns.