If there was a proper rollover of an entire gross amount of regular distribution from a traditional IRA to another traditional IRA or to a traditional account in a qualified retirement plan, proper reporting on a 2017 or earlier Form 1040 is to include the gross amount on line 15a, exclude the entire amount from line 15b and include the word ROLLOVER next to the line. If this is the only IRA distribution being reported on the tax return, line 15b should show $0 taxable under these circumstances.
From the description provided, it appears that the IRS claims that line 15a includes the gross amount, that line 15b excludes the gross amount, but the ROLLOVER notation is not present. The only cases where TurboTax would allow e-filing a Form 1040 with line 15b excluding the distribution but not having the ROLLOVER notation would be if a zero was mistakenly entered into box 2a of TurboTax's 1099-R form and the IRA Information Worksheet showed an excess traditional IRA contribution of equal or greater amount carried in from the previous year, in which case the filed tax return would also have including an explanation statement that TurboTax would require to be entered, or the tax return included Form 8606 calculating a $0 taxable amount because there was more traditional IRA basis than traditional IRA assets. There has been no indication that either such an explanation statement or Form 8606 was ever present in the tax return. Considering those as the only possibilities, the only way that the printed tax return could have the ROLLOVER notation would be if the tax return entries were changed between the time of the e-filing and the time of the printing. There is no other mention on the TurboTax forum of any occurrences of TurboTax failing to include the ROLLOVER notation in an e-filed tax return when it was actually present in the tax return at the time of e-filing, so it seems reasonable to assume that incorrect transmittal did not happen in this case.
