"I see again the above that tells me NOT to report the distribution into an HSA. And since I must now treat it as income, with no penalty, where does it show up as income? Income from the IRA and not from the HSA? "
I believe that @dmertz intended for you to report the 1099-R (since the IRS has a copy of it), but to not answer the question on a subsequent screen that you transferred it to an HSA.
Additionally, if you were in the 60 day window, as dmertz points out, you could conceivably just transfer the IRA distribution back to the IRA (or later if you met one of the exceptions dmertz referred to) so there would be no addition to taxable income.
You say that the "The excess contribution was properly returned to me." To your IRA or to you for spending money? In the latter case, you will report the $7,000 as income.
The only thing outstanding is the 5498-SA. The HSA custodian really ought to issue a correct 5498-SA, and I wonder if the custodian will issue you one.
@dmertz?
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