Trust payments are excluded from the calculation of vendor payments for 1099 purposes

QUESTION: Is there a reason why payments out of trust are not included in the calculations of payments made to vendors for 1099 purposes?

RESPONSE: As there is no relationship between payables and trust (not permitted by most law societies), the 1099 was designed in context of payables and quick payments as the vehicles used to pay vendors.

When funds are received in trust to pay a vendor, the recommended process is to create a payable to vendor with the client disbursement in the distribution tab (process that takes advantage of trade credit), and then billing the disbursement with a disbursement only invoice with an included payment of invoice from trust as part of the process. Both actions optimize cashflow benefit and maintain clear audit trails.