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Thread: Customer issued me a 1099 for purchases they made???

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    Question Customer issued me a 1099 for purchases they made???

    Hello everyone,

    I had two invoices to a company (customer) last year. One was a direct purchase of candles (charged tax because they were give away items for an event). The other was a wholesale purchase as the company resales the candles on their website.

    I just received a 1099 (to my DBA with my SSN number I'm a sole proprietor). The total on the 1099 was the same for both invoices.

    The candles I made were complete items, ready for sale/giveaway. Are they allowed to 1099 me for this?

    I mean, I purchased a TV at best buy, I know I can't 1099 best buy for my purchase... ()

    Is there a dispute I can do about this?

    thanks,
    Gordon

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    root Array Harold Mansfield's Avatar
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    No they can't and I'm pretty sure they're trying to pull a fast one with the IRS. When you bring the matter up they'll say it was sent out to you by mistake. Every year I have someone try that crap, and it's the same excuse every time.

    Just ask them what the heck is this and see what the response is.
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    The tax deduction for the company is going to be the same whether or not they send you a 1099, so there is no tax benefit to the company. Nor is there any harm to you. You have to record the income either way. The 1099 requirements are not straight forward. You have to issue a 1099 to anyone that you pay over $600 to for rents, services (including parts and materials), prizes and awards, or other income payment. However, merchandise sales and corporation are excluded. So is having candles made a service or buying merchandise?? There are fine for not filing 1099, but nothing for files them on excluded sale. So it is in the companies best interest to file the 1099.
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    root Array Harold Mansfield's Avatar
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    I've had this conversation before between what is buying a product and what is considered paying a contractor.
    When I'm working as a sub contractor and another company is paying me, no problem. Totally understand that.

    But when someone purchases a flat 12 hours of my time I'm not filling out their 1099. They aren't hiring me. They're buying a product and that product is listed on my site, same price for everyone. You don't send the spa a 1099 because you spent $650 on messages and facials.

    That doesn't stop me from reporting all of my income for the year.

    If they hire me on an ongoing basis, even if it's only a few weeks, different story.

    The easy answer is to just get an EIN. However I still don't see how purchasing a product means they need to send you a 1099. So I should send MSi a 1099 because I purchased a computer from them? I have a receipt. What's the problem?

    That just doesn't sound right.
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    Personally, I wouldn't worry about it. Some companies send out more 1099's than they need to, other companies don't send enough. As long as the income you report is equal to or greater than the 1099's you receive, then you're okay. Unlike W2's where you have to include them with a tax return, you don't send 1099's you receive in with your return.

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