You are required to disclose all income in your tax return regardless of where it came from.
Did you enter the 1099 into TurboTax? How would they know you got a 1099? They do not get any information on return once accepted by the IRS. When you received your K-1 you were instructed to file it with your return . Did you include the K-1? How is the tax preparation company supposed to know that you received a K-1?
You should correct the return to include this income both federal and state.
