Filed in 2016 but just got a $1000+ bill for Colorado Capital Gain Subtraction prob. CO Rev Dept said my house purchase date doesn't qualify for Capital Gain Subtraction.

[xmasbaby0]

TurboTax does not receive any information from the IRS or your state after your return was filed, so no one at TurboTax knows about a letter you received from the IRS or the state.

I AM BEING AUDITED

If you purchased Audit Defense:

https://ttlc.intuit.com/questions/2924451-i-bought-max-or-audit-defense-and-now-i-m-being-audited

AUDIT SUPPORT

TurboTax has a special phone number for help with IRS/state tax letters, which will be easier than going through regular Customer Support.   At the page below, click on the blue button that says "Get Help from TurboTax Support".  Then it will ask you what tax year is your letter.  Then it will ask you what the letter concerns. Then it will show you the phone number during posted business hours.

https://support.turbotax.intuit.com/irs-notice/audit-support/

[TomD8 · Accepted solution]

Here are CO's rules on the Capital Gains Subtraction: https://www.colorado.gov/pacific/sites/default/files/Income15.pdf 

Note that real estate purchased before May 9, 1994, or on or after June 4, 2009, does not qualify.

[jdrice2003]

I just got the same letter for 2017 Colorado taxes.  It appears that TurboTax did not have the correct dates programmed into their calculations.   

[sevebadian]

I also just received the same letter for the 2016 tax year.

Yes the information at https://www.colorado.gov/pacific/sites/default/files/Income15.pdf

states purchased after May 1994 and before June 2009.

However, the 2016 tax filing instructions shown here: https://cotaxaide.org/docs/2016%20CO%20DR%200104AD%20Instructions.pdf

make no mention of the June 2009 requirement.

Line 5 Colorado Source Capital Gain
Subtraction
You might be eligible to subtract the income you earned
from a Colorado-source capital gain. We recommend that
you read publication FYI Income 15 if this applies to you.
The amount of this subtraction is limited to $100,000 and
qualifies if the capital gain was:
• Earned from the sale of real or tangible personal
property that was located in Colorado at the time
of the sale transaction; and
• Included on your federal income tax return and is
calculated as part of your federal taxable income;
and
• Acquired on or after May 9, 1994 and was owned
continuously for five years prior to the sale
transaction date.

I plan to use the state's instructions for filing an appeal.

[TomD8]

@sevebadian --  It might be helpful to other TT users if you came back and posted the results of your appeal.

[Knick]

I know this is an old post but my wife and I just received a letter for the same thing.  If this is a case where TurboTax had the wrong dates programmed for the deduction is there anything that can be done to offset the interest and penalties involved?

[BillM223]

Under the TurboTax Accurate Calculation Guarantee, TurboTax will cover the penalties and interest caused by a TurboTax calculation error. Please see this TurboTax webpage for a full description.

Note the link 

"How do I submit a claim under the TurboTax 100% Accurate Calculation Guarantee or 100% Accurate, Expert Approved Guarantee?"

which is how you will file a claim.

@Knick

[Knick]

Thanks so much for the rapid response this is great information!

[arfrank3]

My wife and I just got hit with this as well for our 2019 Colorado filing.  Was this confirmed to be a Turbo Tax filing instruction issue for excluding the stipulation that the sold home had to be purchased prior to June 4th 2009? Did anyone get reimbursed from Turbo Tax?

[jdrice2003]

This is part of the response from TurboTax, regarding an oversight on a checkbox:

"Colorado does allow another capital gains subtraction which includes the correct time period for your property, but it only applies to tangible property, not real property.

The Colorado interview shows a screen asking you to choose if your property qualifies under one of these provisions.  When one of the checkboxes is selected, the interview allows you to move forward and add the property. 

 In your return, the checkbox for tangible personal property was selected and the information for your real property was entered in the program. TurboTax then used this information to calculate the subtraction on your return.

If you had not made a selection under one of the qualifications, you would not have been able to enter the property and the subtraction would not have been calculated.

Your situation does not involve a miscalculation by TurboTax, so your case doesn't qualify for the TurboTax Accurate Calculation Guarantee.  If you have not done so already, we suggest you pay the amount due as indicated in the notice.

We understand how frustrating it can be to receive a letter from the IRS or your State Taxing Authority. If you need further explanation of the changes made to your Tax Return, contact the Department of Revenue for the state of Colorado following the instructions provided in your letter"

If I remember correctly,  the State waived my penalty when I informed them of this issue but I still had to pay the tax. 

Good luck!