Year End Taxes & 1099s
Urban Market files all sales taxes from the sale of items within the market. We do not provide year end statements. Make sure to keep records each month you are with us to file your year end taxes.
1099s are not provided to vendors. We recommend the following:
- Make sure to keep track of your sales, rent, and commission paid yourself using the information from your contract and seller account. Add up all the reports for the year and report your sales and expenses to the IRS.
Sometimes a person will ask if we will send a 1099-MISC for each vendor in the store. After research with accountants and tax professionals, we want to provide a detailed explanation as to why we do not provide 1099’s to vendors.
As a general rule, “you must issue a Form 1099-MISC to each person to whom you have paid at least $600 in rents, services (including parts and materials), prizes and awards, or other income payments.” In this case, Urban Market does not pay rent to vendors, you pay rent to us. Urban Market provides a service to our vendors (You don’t work for us, we work for you!). Urban Market does not give out prizes or rewards, but we do payout for merchandise sold every month. This often leads to confusion as it seems to fit into the “Other income” category. A careful reading of the 1099-MISC specific instructions from the IRS website found at https://www.irs.gov/ instructions/i1099msc, reveals a list of exceptions:
Some payments do not have to be reported on Form 1099-MISC, although they may be taxable to the recipient. Payments for which a Form 1099-MISC is not required include all of the following...
Payments for merchandise, telegrams, telephone, freight, storage, and similar items. “
Urban Market’s payments to vendors at settlement constitute payments for merchandise, therefore these payments do not have to be reported on a 1099. This does not mean vendors are not responsible for reporting their sales or income to the IRS. How you report your sales revenue is conversation each vendor should have with their tax professional.
As with much of the tax code, this topic can be a confusing one, which is why many markets do things in many ways. Furthermore, all the material prepared above is for general information purposes only and does not constitute legal or tax advice.