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Farmer's Market, Square Orders 1099-NEC

Level 2

I received an interesting question from a farmer's market on tax compliance.

"The farmer's market received a 1099-K from Square, and I believe that the Market should be sending out 1099-NEC forms to all the providers that earned over $600 in 2020.  In past years, customers paid the producers directly because the market was "in-person", but in 2020 the customers have pre-paid for their orders through Square.  Square then pays the Market and the Market writes checks to the producers.  Does the market need to issue 1099-NEC forms or are we exempt because we are a tax-exempt cooperative?"

Any ideas regarding this question would be greatly appreciated!  

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1 Solution

Accepted Solutions
Level 2

Thank you for the reply!

I read the instructions on the 1099-MISC, and found the correct reporting solution.

"Box 7. Payer Made Direct Sales of $5,000 or More

Enter an “X” in the checkbox for sales by you of $5,000 or
more of consumer products to a person on a buy-sell,
deposit-commission, or other commission basis for resale
(by the buyer or any other person) anywhere other than in a
permanent retail establishment. Do not enter a dollar amount
in this box."

Thank you again for pointing me in the right direction!

View solution in original post

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2 Replies 2
Level 15

1099-NEC is Services. You have the condition of Product Sales.

The 1099-K is "settlement" of Funds. Not which type of activity; it might not even be sales at all.

Two different things.

"Square then pays the Market and the Market writes checks to the producers."

Which is like sharing a credit card terminal. But if the market is the Payee for all sales, then I would read the instructions for 1099-Misc for product sales.

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Level 2

Thank you for the reply!

I read the instructions on the 1099-MISC, and found the correct reporting solution.

"Box 7. Payer Made Direct Sales of $5,000 or More

Enter an “X” in the checkbox for sales by you of $5,000 or
more of consumer products to a person on a buy-sell,
deposit-commission, or other commission basis for resale
(by the buyer or any other person) anywhere other than in a
permanent retail establishment. Do not enter a dollar amount
in this box."

Thank you again for pointing me in the right direction!

View solution in original post

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