How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask Chris Freeman Your Own Question

Chris Freeman
Chris Freeman, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 2
Experience:  Over 25 years experience in individual and small business taxation and small business consulting.
Type Your Tax Question Here...
Chris Freeman is online now
A new question is answered every 9 seconds

re: 1099 misc direct sales of $5000 of consumer products we

Customer Question

re: 1099 misc direct sales of $5000 of consumer products

we are a wholesale/retail distributon companyselling natural/cultured stone, stucco & accessories, commercial roofing, brick and block. we sell to retail distributors, contractors, and homeowners.

contractors purchase material to be installed on jobs in progress. do i still need to report on the 1099 misc.
Submitted: 1 year ago.
Category: Tax
Expert:  CGCPA replied 1 year ago.

Welcome to Just Answer. I am here to help you resolve your tax and finance concerns. Please feel free to ask anytime you need extra help.

Since sales to a contractor do not generate payments from you to the contractor, the contractors should not be issued 1099 forms. Therefore, you not only do not need to issue 1099 forms to them but need not be concerned about the Misc direct sales box. However, if you have sales people who are paid on a commission and receive 1099 forms for their payments you are required to issue the 1099 forms to them for their commissions. Then you will also need to complete this box. I agree that the phrase "consumer products" is a vague one at best but recommend completion of the box rather than get into a legal battle with the IRS. The reason you have had varying answers is this lack of specific definition. It will be much easier to comply than to fight this since the box entries do not reflect on the payees tax returns.

Customer: replied 1 year ago.

these products are an incidental part of a trade that consists of rendering services per section 31.3508-1 (f)


does this need to be reported in line 7 with box 9 checked


this is what i need answered....

Expert:  CGCPA replied 1 year ago.
Yes, it does IF you made sales to purchasers for resale purposes. A contractor buying for installation at a customer's location fits this exactly. Check box 9.
Customer: replied 1 year ago.

we are like lowes.....they are not issuing 1099's per th general manager here...why would we have to?

Expert:  CGCPA replied 1 year ago.
The law has specific requirements and 1099 forms must be issued to parties (except corporations and government agencies) to whom YOU paid more than $600 in a calendar year. Lowes may be following this requirement to their contractors. Remember you only issue the forms to those YOU paid more than $600 not those who paid you. Failure to follow the rules (if Lowes is doing that) does not except you from those rules and will never be an acceptable excuse.
Customer: replied 1 year ago.


this is not helping me....i know about payments of $600+ to contractors. i'm talking about the new law regarding direct sales of at least $5000 of consumer products to a buyer for resale anywhere other than a retail establishment box 9 on 1099. page 7 on 2012 1099 instructions

Expert:  Chris Freeman replied 1 year ago.

Hi, this is a different expert replying to your question. I think there is some confusion about "direct sales" as in direct marketing. If you are selling your inventory supplies to other contractors for resale, and the amounts of the sales are greater than $ 600 in a year, report the total amounts as non-employee compensation in box 7.

Customer: replied 1 year ago.

i'm running into the same problem that i started with.


this so i'm done here.


no questions were answered that provided any new info.


thanks...

Expert:  Chris Freeman replied 1 year ago.
Perhaps you should try asking the question in a different manner. Based upon the information you have provided, my professional recommendation stays the same. The direct sales reporting is not a new law, but came about roughly 10 years ago when MLM became more widespread. I have been preparing 1099s for over 20 years without any issue.
Expert:  Chris Freeman replied 1 year ago.
If you are selling your inventory to others for resale, then record the sale as with any other buyer. If the buyer is not performing work for your customers or your under your business, then it would simply be a wholesale sale. This is a confusing area with a lot of gray - it doesn't surprise me that you have had some trouble getting a straight answer. Much of tax law is that way.
If your contractors are performing work for YOUR clients or under your company name then I would definitely report it as non employee compensation.
I have been compelting 1099s for over 20 years without issue. I hope that settles your concerns.

JustAnswer in the News:

 
 
 
Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.
 
 
 

What Customers are Saying:

 
 
 
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
< Last | Next >
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
  • I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight. Bonnie Chesnee, SC
  • Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation. John Minneapolis, MN
  • Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with. Orville Hesperia, California
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex Los Angeles, CA
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP Hesperia, CA
 
 
 

Meet The Experts:

 
 
 
  • Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    570
    10 years experience
< Last | Next >
  • http://ww2.justanswer.com/uploads/KU/KUMI95/2013-9-30_195031_kumar.64x64.jpg Wallstreet Esq.'s Avatar

    Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    570
    10 years experience
  • http://ww2.justanswer.com/uploads/CU/Cuttinggirl/2011-10-29_03719_wcrop2.64x64.jpg Wendy Reed's Avatar

    Wendy Reed

    Enrolled Agent

    Satisfied Customers:

    3052
    15+ years tax preparation and tax advice.
  • http://ww2.justanswer.com/uploads/CATax/2009-08-04_204548_Mark.jpg Mark D's Avatar

    Mark D

    Enrolled Agent

    Satisfied Customers:

    985
    MBA, EA, Specializing in Business and Individual Tax Returns and Issues
  • http://ww2.justanswer.com/uploads/IN/insearchoftheanswer/2013-8-16_0233_attorney.64x64.jpg Richard's Avatar

    Richard

    Tax Attorney

    Satisfied Customers:

    3229
    29 years of experience as a tax, real estate, and business attorney.
  • http://ww2.justanswer.com/uploads/MY/MyVirtualCPA/2012-7-5_44024_cookmegan1.64x64.jpg Megan C's Avatar

    Megan C

    Certified Public Accountant (CPA)

    Satisfied Customers:

    6121
    Licensed CPA, CFE, CMA who teaches accounting courses at Master's Level
  • http://ww2.justanswer.com/uploads/JG/jgordosea/2012-6-7_43138_GordosVeritas.64x64.jpg jgordosea's Avatar

    jgordosea

    Enrolled Agent

    Satisfied Customers:

    2783
    I've prepared all types of taxes since 1987.
  • http://ww2.justanswer.com/uploads/OZ/ozaukeecpa/2012-6-7_193219_Picture1croppedandshrunk.64x64.jpg MequonCPA's Avatar

    MequonCPA

    Certified Public Accountant (CPA)

    Satisfied Customers:

    2231
    CPA, Over 30 yrs experience w/individuals and small businesses. Masters in Tax.