From USDOJ:
"Rebates are typically cash payments from the real estate broker to his or her client after closing."
http://www.usdoj.gov/atr/public/real_estate/rebates.htm

With respect to 1099's, I think you all have that wrong too.
http://www.washingtonpost.com/wp-dyn/content/article/2007/06/08/AR2007060801290.html

In Oregon, you can't pay a non-licenced person part of your commission.

I usually give a nice closing gift, in the $100 range (Commissions average about $6k after my split, to put that in perspective).

Buyers, REAL buyers, are the hot commodity in these here parts these days!

-jeff

The way I understand it, you can do anything you want with your commission at the close of escrow. It's your money, give it all away if you want, but you can only write off upto $25 unless it is towards Travel or entertainment.

Could be wrong, so I would run it past your broker...

http://www.washingtonpost.com/wp-dyn/content/article/2007/06/08/AR2007060801290.html

"However, the Internal Revenue Service has taken the opposite position. In a private letter ruling Feb. 9, the IRS said that such cash rebates are not income but rather represent an adjustment to the purchase price of the home.

Such rulings may not be cited as precedent, but they do reflect the thinking of the IRS. Accordingly, it is safe to say that a real estate commission rebate does not have to be reported as income."

Looks to me that a rebate is neither income to the buyer or income to the agent; however, always consult a tax professional.