1099-DIV forms will not be issued for an IRA account. Check again, it has to be for a non-IRA account. You are correct that IRA account income will not be taxed until the money is taken out of the IRA. Then you will receive a 1099-R (R for retirement) form with the withdrawal amount.
The reason dividend reinvestment is taxed in a NON-IRA account is because you have received something of value, the extra shares bought with the dividend. For income tax the form of the income does not matter. Any income is taxable unless there is an except. Doesn't matter if it is cash, barter, etc.
Think of it this way. Your account got the dividends and you used it to buy more shares. If you had used it to buy clothing or a TV or whatever, you would expect it to be taxed. Same thing here.
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