Yes, by filing an amended return you will be able to offset the selling price with her cost basis. The 1099-B is reporting that she did sell stock in 2021. If none was sold then she would not have received the tax form to report. See the following information to assist you. Be sure to include a copy of the letter with your amended return. I would try to call the number on the letter to let then know your plan so they will indicate it on her file and realize it is not being ignored.
The term 'noncovered short term' simply means the agent issuing the document does not know the cost basis of the shares sold. They did provide the holding period which is stated as short term. Your daughter or yourself must determine the cost basis of the shares that were sold. Since the vested shares were reported in her income (vested shares) this is the cost basis for the total shares that were vested. The shares became unrestricted and now belong to your daughter. When this occurs then the company often sells enough shares to cover the tax and includes that 'withholding' on the W2 with her other federal tax withholding. Then she receives the Form 1099-B for the shares the company sold on her behalf.
There is no double tax because she can use her cost basis, which is the vested value, is included in her wages. This means that the cost of the shares that were sold will quite likely be very close to the selling price reported on the Form 1099-B.
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