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Your problem is not a bug. As was repeatedly explained to you, TurboTax cannot E file a state return unless the federal return is also e-filed. This is a security precaution that was put in place for the 2016 tax season, because during the 2015 tax season, there was a rash of fraudulent returns that were filed by crooks who would file multiple state tax returns without filing a federal return. This was to take advantage of the fact that states had weaker security than the IRS. I was able to find this article after just a few seconds of searching.
New York State law does indeed say that if a customer use this software to prepare their tax return, they must e-file the return. However, the law contains an exemption if the customer has a tax situation that prevents the software from e-filing their return. New York also eliminated the $50 penalty for not e-filing in 2016 because they were aware of this issue.
New York State also makes it illegal for tax software companies to charge extra for state e-filing, so you haven’t even paid any money that you need a refund for. You paid for tax preparation, you got tax preparation. You mailed your federal return, so now you have to mail your state return. Or, you could go to the state tax website and e-file on their free web forms by copying over the information from your TurboTax return.
It’s not a product defect.