It certainly sounds like you have been treated as an employee. The IRS has very specific guidelines for determining whether a worker is an independent contractor or an employee. Take a look at the link below for more information. You should contact a local employment attorney to discuss your options and more specifics of your matter. It may alos be helpful to discuss the matter with your tax preparer. Good luck.
The company may be misclassifying you as an independent contractor to avoid paying workers' compensation insurance premiums, unemployment compensation insurance premiums, and the employer-paid portion of payroll taxes.
My answers to questions posted on AVVO are intended to provide general information only, and are not intended to be legal advice. Employment law issues typically require a careful case-by-case analysis. Consequently, if you feel that you need legal advice, I would encourage you to consult in person with an employment attorney in your area.
Based upon the facts you state, it is very likely that you are an employee for tax purposes. This would mean that the employer has failed to withhold taxes from your paycheck (hence, his incentive to violate the law). Yes, if the company issues a 1099 to you, you will have to pay up even more when filing your tax return. If you are going to leave the company soon anyway, it would not be worth your time to report him to the IRS. Perhaps a conversation with him relating what you have learned about tax law would help. If he checks this out with an attorney, or on the IRS website, he will have to agree. Other than having him change your status and withholding retroactively, there is not much else you can do to protect yourself.
This is not intended to be legal advice, and is general in nature.