They want you to fill out a W-9 to give them your ssn or EIN if you have one. You will fill out a schedule C in your personal tax return. Yes you put down all your expenses and the refund you sent back. You will only pay tax on your Net Profit.
You dont need a special form to send back the refund. Just keep good records if the IRS ever asks about it.
Here is some IRS reading material……
IRS information on Self Employment
http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Self-Employed-Individuals-Tax-Center
Pulication 334, Tax Guide for Small Business
http://www.irs.gov/pub/irs-pdf/p334.pdf
Publication 535 Business Expenses
http://www.irs.gov/pub/irs-pdf/p535.pdf
