"Another article mentioned that an S-corp offers business owners three basic options for paying themselves: by salary, distributions, or both"

That's true.  But there has to be some salary, commensurate with what they would be paid in an arm's-length transaction.  Obviously, if they collect more than that, it must be from their investment in the company and that's what shows up on the K-1.  

IRS isn't cracking down on this any more than they have for the last thirty years, and of course since the recent movement to defund the tax police they aren't cracking down on much these days. It's acceptable to use the 1099  for some things that would be reported that way anyway, such as director's fees.  And they might argue that they come under allowable practice for truckers, since many of them are paid with a 1099 rather than a W-2.  The fact that they're doing the 1099 shows some awareness that they have to pay Social Security taxes on some of what they earn.  Did the 1120-S show it as shareholder compensation?  That might make a difference, or it might not, depending on whether IRS is matching payroll returns to income tax returns, or just looking at that line entry.  

Was this the first year the 1120-S preparer did that return?  They might have been told they could do it that way for 2021, but don't come back and get someone else to do the 1040.