For the last few years, I have been working as a subcontractor to a subcontractor that does work for the federal government. Last year sometime, they hired an outside partner whose job it is to make sure all contractors are actually contractors, to mitigate the risk of misclassification. The outside partner takes on all of the liability if there's an audit.
Because of this, I haven't gotten paid for work I've done since then–even work I already had a contract for, and already completed–and I've been given a “stop work” order on contracts that are in process.
I keep getting emails saying that they need to prove that I actually have an S-corp, that I actually give myself a wage, and to do that, I need to submit an unredacted paystub showing that I pay myself a fair wage based on IRS requirements.
I have asked, blankly, if it is required for me to share my proprietary business data in order to move forward. I have asked if that is even legal to require. They side-step every time by telling me that the purpose is to protect the company. I know, I don't care. I've provided tons of information already, including proof that I own my own business, etc.
They've now given a second option–that I can submit an indemnification letter from my CPA indicating that I pay myself a fair wage based on IRS requirements.
I think it's bullshit. I don't need this work badly enough to fight it, but I'm pissed on principle.
Do I just submit the CPA letter? Do I ask them to pay for the CPA's time that I would have to pay for? Is there someone I can report this to? Is this actually illegal?