In January, the trustee is required to send a tax form (Schedule K, I think it is) to the individual who received income from the trust, and that person is required to report the income as interest, dividends, or capital gains (as the case may be) on his or her tax return. The trustee will also report that payment on the trust's tax return. No other person or entity is involved in this.
I am assuming that we are talking about trust INCOME, not a distribution of capital. And of course I am assuming that the trustee is permitted to distribute income as he or she believes needful, and that it's okay not to distribute ALL income (in which case the trust reports the income and pays taxes on it at the rather high trust rates).
