Providing employees a W-2 and 1099-Misc in same year will raise a Red Flag!
Expect an extra scrutiny from the IRS if you give a W-2 and a 1099 to the same worker in one year during the payroll tax audits.
Providing an employee both a W-2 and a 1099-Misc in the same tax year will raise a red flag with the IRS. This will raise suspicion with the IRS that maybe perhaps there was a misclassification of employees as contractors.
The Service is skeptical of cases which involve retired workers returning to a firm doing the same job, however, as a contractor.
If you are perhaps considering to rehire employees as consultants, you need to properly document the circumstances of the rehire condition and this should not be due merely to circumvent payment of payroll taxes!