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  1. #1

    Default 1099 Merchandise Value and Sales Tax

    My question involves independent contractors in the state of: California

    I am an independent contractor for a company that is based out of state and I was awarded a prize based on work that I've done for them. They will be putting the value of the prize on my 1099 along with all my other payments.

    Do they usually add sales tax to the value of merchandise given on the 1099?

    Also, has anyone had a dispute where the client over-valued the value of the merchandise and refused to correct it? I do have proof of list price of item around the date I won it.

  2. #2
    Join Date
    Sep 2010
    Posts
    19,901

    Default Re: 1099 Merchandise Value and Sales Tax

    Sales tax is not usually charged nor included.
    The value of the reported gift is the MSRP (even if it's commonly discounted and nobody actually ever pays MSRP like for cars).

    While you can ask for the 1099 to be corrected, what usually you do is you declare the ACTUAL income it represents and if the IRS inquires, prepare to back your interpretation up.

  3. #3

    Default Re: 1099 Merchandise Value and Sales Tax

    Thanks! I actually had the rules of the contest and it lists the value of the two "cash" prizes, but when you deduct that from the overall value of all prizes, you can easily see the ARV. So, I am keeping a copy of that and a copy of a couple reviews of the item done around the same time the contest happened.

    I will probably have to pay use tax, though.

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