The IRS went to a lot of trouble to change code 2 Exceptions to the 10% penalty, listing for 2020 instructions for 1099R code 2 is to be used for section72 (t). Section 72 (t) is the new COVID law making only 1/3 taxable for each year and waiving the 10% penalty

If the Form 1099 R had a code 2 then for Hawaii nothing is taxable as retirement is always taxable for code 1.  My customer now has 78864 taxable to Hawaii because the institutions filling out the Form 1099 R are refusing to follow the IRS guidelines for Code 2.

This new fix is making the 1/3 portion of the retirement income not taxable to Hawaii, but then in another section of the Hawaii return it is adding back the whole 78864.

Does anyone know who to talk to at the IRS to get the institutions filling out Form 1099 R to  use code 2 per the 2020 code 2 instructions for Form 1099 R..  The IRS has penalties of up to 1 1/2 million if Form 1099 R is not filled out properly.