1099 required for direct sellers?


A

allanmcnaughton

We are a direct sales company who utilizes independent sales
reps to sell our product line in a home party setting. The
party guests pay the sales rep directly (in case of cash or
check) and pay the company directly in case of credit card.

Our model pays a 25% base commission to the sales rep. The
sales rep takes the 25% out up front (from the cash/check
proceeds) and sends in the remaining 75% to pay for the
order. The order is then shipped directly to the party
hostess. The customer is effectively buying the item from
the sales rep, not the company (although the company
manufactures and warranties the item).

Are we supposed to issue the sales rep a 1099 for the
commission portion (25%) of the sale? I've found conflicing
advice on this topic. I see that some companies issue a 1099
on any comissions, incentives, and bonuses paid out. Others,
such as Avon, issue a 1099 if more than $5000 of goods were
purchased?

Please help!

Allan
 
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S

Steve Pope

Are we supposed to issue the sales rep a 1099 for the
commission portion (25%) of the sale?
Why wouldn't you want to?

Steve
 
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