So I operate my own business as a sole prop and am an independent contractor providing a service to different businesses within my profession. I am an independent locum veterinarian and I fill in when regular doctors are unable. I am essentially free lance, make my own schedule, don't receive benefits, and do not receive special instructions from companies in how to do my job. I also pay all of my own federal and state taxes as is required for independent contractors. I essentially set up shifts by emailing with places and agreeing to pick up shifts on an as needed basis.

I have been doing this for the past 3 years and have historically have always received 1099-NEC for my work. One company has been paying me as 1099 - I submit my invoice and they send me checks. I set my rates. However, now they are saying that was not supposed to be that way and I was meant to be paid as W2 but we are a dozen invoices in and I much prefer being paid 1099 due to my solo 401K. They did mistakenly pay me as W2 once at the very beginning but all invoices since have been 1099.

I asked them if they could reverse the W2 payment and reissue but they said they can't. And moving forward they want to pay me as W2....but if I've already been paid as 1099 for most of the year (which according to the definition of independent contractor is appropriate for my situation)...

1) what happens when you get both a 1099 and a W2 from the same company in the same calendar year? I feel like this is asking the IRS to conduct an audit and get me in trouble.

2) They said I am an employee based on the following, which is strange since I don't see anything in IRS rules pertaining to this just that it is based on behavioral / financial control and relationship (ie: permanency and benefits).

"Determining if someone is an independent contractor vs. and employee is not just a COMPANY policy, but rather a matter of compliance with IRS and state and federal regulations related to worker classification. Proper classifications is a hot topic right now. Employers (in a nutshell) are not permitted to pay via 1099 if workers are doing to same job that regular employees do - i.e. relief doctors are covering for our doctor employees. Instead, we are expected to hire such workers as employees - typically temporary or on call, depending on whether the need is finite or intermittent - and provide applicable benefits and deduct proper payroll taxes."

They also said that my "benefit" is them deducting taxes on my behalf. I have a signed offer letter stating I do not qualify for benefits and that it's not a contract and relationship is at will and may be terminated at any time.

I have already paid federal and state taxes with all of the 1099 income provided to me so that boat has sailed as they are due quarterly. I fully believe I should be classified properly as 1099 as they don't have any of the controls that an employer has over employees. Not sure how to fix this situation when they're being adamant that I now switch to W2, which would suck, as this one place has been a large chunk of my income and I want to be able to contribute as much to solo 401K as possible and do appropriate deductions of expenses and these things aren't possible with W2 income.

Any thoughts on this?

Thank you.