With Sie capitalized, is there any way to know, simply from the sentence, whether it is "They are" or "You are".
In a real conversation, you would have context (have we just been speaking about them or about you?).
Without such context, there's no way to tell the difference between "they are" or "you are" when Sie sind… is at the beginning of a sentence. (And therefore both translations will be accepted on Duolingo.)