incorrect or fraudulent W2?

Question

I worked for an employer for a short time last year and they cut me a check for $660. (Nothing was held out of the check.) They sent me a 1099 showing the $660. However, they also sent me a W2 in my name showing I had received $1430.( I never received this income nor had any of the withholding for SS of FIT that it showed). I contacted them and asked them to send me a corrected w2 showing all 0's. At first they said they would. I called back after 3 weeks had passed and they told me they had would not send me a corrected w2 and wanted me to send the original one back! (As if!) Then they tried to tell me they never sent it to the IRS! I've contacted the IRS to get directions for my next step in preparing my income taxes. What I want to know - do you think it's possible they are committing some type of fraud and what all could they benefit by doing that? Also, I was an employee, not an independant contractor. Can someone help me put the pieces together here?
Thanks.

Answer 1

My advice is to make a copy of the W-2 if you only have one copy, or send the employer one of the copies if you have multiple W-2s. Send the employer a certified letter stating that you were not the recipient of this income and they have verbally acknowledged that this W-2 is in error and was not transmitted to the IRS.

Then file your taxes without the W-2. If your return is examined, you have documentation that this W-2 does not belong to you.

At this point I would assume they have made an error in assigning the W-2 income to you. You have no reason to ask for a W-2 with all zeros.

If you agree that you received income of $660 then even though you may have qualified as an employee, I would just file the 1099 as an independent contractor and not deal with this employer again.