It would depend on the verb.
Sie liest = "She reads" Sie lesen = "You read" (formal address) or "they read"
The more difficult question is how do you determine the difference between 'Sie' = they and 'Sie' = you when "Sie" is the first word in the sentence meaning it will be capitalized no matter what, and both forms use -en endings on verbs.
Both "They read the newspaper" and "They are reading the newspaper" are possible (and accepted) translations.
Zeitung is feminine, so you can't use the masculine/neuter ein.
It has to be eine Zeitung for "a newspaper".
That is a question to ask your English teacher.
German does not make this distinction.
The conjugated verb form tells you that this is not 3rd pers. sing. sie (= she) because then it'd be sie liest, hence it is either 3rd pers. plur. sie (= they) or formal you. To distinguish those, you'd need context.
I really think they should somehow explain how you can tell the difference, especially without the verb and the explanation underneath...
Sie lesen die Zeitung. They are reading the Newspaper. or They reads the Newspaper.