1099 for consignors

[TKTax]

Taxpayer owns an art consignment shop. She sells items of art created by consignors. She subtracts her consignment fee, and pays rest of sale price to consignor.  I seem to read conflicting information on whether or not she needs to issue 1099-misc to consignor if over $600. I thought that as long as there is no service performed for her, no 1099 need be issued. 

Any opinions?

 

[Catherine]

I would send 1099's.  You say the art is *created* by the consignors, so they are likely (or even just possibly) in an activity engaged in for profit (else they'd give paintings away).  There are penalties for NOT sending 1099's, but no penalties for sending ones that are not needed.

[DANRVAN]

I would not. Consignors are selling goods, not services.  Actually the shop owner is the one providing the service.  Filing unneeded 1099's can cause recipients headaches and issuer extra cost of preparing them.

On second thought, there is one situation I am aware of where 1099-misc is issued for purchase of goods.  If taxpayer is in the business of buying fish for resale.

 

[DANRVAN]

9 minutes ago, DANRVAN said:

I would not. Consignors are selling goods, not services.  Actually the shop owner is the one providing the service.  Filing unneeded 1099's can cause recipients headaches and issuer extra cost of preparing them.

On second thought, there is one situation I am aware of where 1099-misc is issued for purchase of goods.  If taxpayer is in the business of buying fish for resale.

 

He must issue 1099 misc if paid "cash" to individual who is in the business of catching fish.