Hello how are you today?
I'm sorry to hear about your issue.
Unfortunately, in this situation your only option is to send in the Federal income tax return for 2012 and all supplemental information.
Reply to the letter at the address, and send it via mail. Do not fax the information.
I'm thinking that perhaps your fax got lost.
So, your guess is correct. You will send the return and 1099-R with an explanation that you disagree with the decision to disallow the retirement