The piece of paper saying it is an alternative form 1099S is effectively the 1099-S. It's almost certain that the IRS was sent a copy by the closing agent.
Q. We did not file a 2019 return for her. Can we do that retroactively?
A. Yes. It is not too late to file a 2019 tax return.
Q. More importantly, should we file a 2019 tax return?
A. No. If you get an IRS notice, it's easily explained. The fact that she has no other reportable income means she is unlikely to get an IRS notice. A 1099-S issued to a Social security recipient will, most likely, be presumed to be a home sale, by the IRS.
