"Payer made direct sales of $5,000 or more..."

[bdp31770]

I see a question similar to mine answered here:

ttps://ttlc.intuit.com/community/taxes/discussion/my-1099-misc-has-box-9-checked-that-says-payer-made-direct-sales-of-5000-or-more-of-consumer/00/596589

...though my situation is a little different so I wanted to make sure. I did about $2000 worth of web design work for a company and the 1099 they sent me said in Box 7:

"Payer made direct sales of $5,000 or more of consumer products to a buyer (recipient) for resale."

Does this mean they resold my services? I was dealing with the parent company of a counseling agency that had dozens of branches and offices. I have no problem with that I just want to make sure they aren't saying they paid me over $5,000. Also, mine is technically a service and not a product, though for this situation it may not matter.

There's a number on the 1099 I can call but first I was just wanting some clarity on the issue. Any advice is appreciated.

[MinhT1 · Accepted solution]

Box 7 checked on your form 1099-MISC means that the payer has sold to you more than $5,000 of consumer products for resale. They are the seller and you are the buyer of these products for resale.

If this is not the case, you should call and ask for a corrected form 1099-MISC.

[DLMCPA]

Did you get a corrected 1099?   Did you sell services or personal products?

[jel11633]

I never got a corrected 1099. The company I worked for went bankrupt, then law firm in charge of their bankruptcy said they, the law firm, were not responsible for providing me a corrected 1099.  They showed me the parts of the law detailing that. 

I did provide services for them, though the 1099 said they sold me about $5000 worth of product for resale.  They were a counseling agency, I dont think they had any products in the first place, only services, and I dont sell any products anyway.

So either it was a clerical error on their part or some sort of tax evasion strategy, I have no idea. 

[RobertB4444]

In this instance providing services or resale of product doesn't really make much difference to your taxes.  You will still put this on your tax return as income from business.  It's just that you won't be able to deduct the cost of product that you sold from the income that you received.  

If the amount that is shown on your 1099 is different than the amount that you actually received then you should still enter it on your tax return (since you can't request a corrected form) but then make an expense entry to correct the amount shown to the amount actually received.  

For instance, if you received $4000 but the 1099 shows $5000 then you would make an expense entry for -$1000 and label it as "correcting entry" or something similar.