Technically speaking, you are not the payor, the service you are using to gift is the payor. They are responsible for issuing the 1099, not you. And they have no clue what the payment is for, gift, service, product, reimbursement, etc. They don't know, they don't care, the government is just forcing them to do this. Good luck in dealing with this for you or your friend. It is very frustrating and just goes to make all our taxes that much more complicated.
