You are focusing way, way too much attention on the words "1099 income" and "sole proprietor." The absolute key to all this is understanding what "California-sourced income" is and YOU DON'T HAVE ANY based on what you've said.
If you're like most taxpayers it is highly likely that you've got some other "1099 income" too. Did you get a 1099-INT, or a 1099-DIV, or maybe even a 1099-B? If you did, I'll bet dollars to donuts that you aren't thinking that somehow this income also needs to be reported to California. But of course you most likely did get one or more 1099-MISCs and you are a sole proprietor, (which is the focus of the article), and you've psyched yourself out that now you might have to pay tax to California on your sole proprietor income and not understood the phrase "California source income".
"By the way... the accountant who filled out that 1099 thinks she may have been erroneous in sending my 1099 copy to the FTB in CA. Is that what caused this? "
100% "YES!" The California FTB got a 1099-MISC that states you have California-sourced income but you didn't file a California income tax return. BINGO, you get a dunning letter! (It leads me to question the competency of your accountant, but that's up for you to decide.)
