If the employee doesn't cooperate with the feds, will the feds then prosecute him?
Where does THAT go?
Yeah, that.
Not that I want to see some hapless business owner be put through the wringer, but I'd be really interested to see what the outcome would be if someone either refused the feds or refused the state and was then prosecuted. I'm not sure either entity would protect the employer from the other, and all I can think of for the situation is "Kafka".