If we understand the situation correctly, the answer is no, such rebates are not reportable. We spoke with IRS agent Power (ID# 1002121), who confirmed this. If you are issuing a rebate to a customer based on the sales dollars they spent with you, you are effectively discounting the sales after the fact. You are not paying for services, and the rebate does not represent income to the party but a discount on their payments to you. Therefore it is not reportable on 1099-MISC.
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