@ee-ea
Are you sure about that? They said they were a consignment business. eBay sends a 1099 for their gross sales, but they need to track the percentage paid out to the owners of the consigned property.
@maggie54
As I read the instructions, since you are a business, you are required to issue a 1099 to anyone whom you pay more than $600 during 2021. In this particular case, it would be a 1099-MISC with the payments in box 3. You should be sending all of your consignors a form W-9 before you start doing business with them, to collect their tax number.
https://www.irs.gov/pub/irs-pdf/fw9.pdf
This should be part of your standard on-boarding process along with getting their PayPal or bank information to make the remittances.
You can be penalized for not having a W-9 from each of your consignors. If any of your consignors indicate that they are an S or C corporation, you do not have to issue those entities a 1099, but you should keep the W-9 in your records in case the IRS comes asking questions.
If your consignors refuse to give you a W-9, you may be required to withhold part of their payment as backup withholding and send it to the IRS in their name. They could claim it as a refund by filing a tax return and including their consignment income.
