For MSCs which use PayPal, you will not get a 1099 from the MSC even if you have over $600 in fees. The responsibility passes to PayPal, and they aggregate all payments to you together. They will not send you a 1099 unless the aggregated total exceeds $20,000 and 200 transactions (that is the IRS requirement; [
www.paypal-community.com]). I used the "aggregate" intentionally since PayPal has no way to distinguish fees from reimbursements, so you have to report all revenue on Schedule C and then all expenses which are reimbursed are listed elsewhere on Schedule C. This includes the cost of items which you were required to purchase. Some MSCs aggregate all payments and report that number on a 1099 form. They should only be reporting fees, but some aggregate. The there is the case of MSCs with flat fees and required purchases, so again you have to keep track of it yourself.
I personally report all revenue on Schedule C. Then I list all required expenses on Schedule C. That way everything is listed and I don't have to worry about whether the MSC aggregated or not, whether the payments went through PayPal or not.
A previous response mentioned something critical. You are required to report all income / revenue regardless of the amount from each source. $20 gets reported if that is all you get from a given MSC in 2015. $610 shown on a 1099 gets reported. $13,256 remitted to you through PayPal gets reported even though PayPal will not send you a 1099.
Shopping Southeast Pennsylvania, Delaware above the canal, and South Jersey since 2008