After you file

the issue is why the state says you did not claim it while you say you did.  did you carefully check over the state return that was filed to make sure it was reported.  if it  was then it's up to you whether to protest your self or use a service offered through Turbotax or even hire an outside pro

The Audit Defense service is provided by TaxResources, Inc., also called TaxAudit.com, in partnership with TurboTax. If you paid for Audit Defense and you received an IRS notice, call TaxResources, Inc. at 877-829-9695, or report your notice on their website at http://intuit.taxaudit.com/. Do not contact the tax authorities until you have spoken to TaxResources. They may contact the tax authorities on your behalf.