Turbotax FAILED to inform me that I have to file with the state of California. What now ?

[laxustat]

Hi guys,

I am here because I have received a notice from the state of CA to inform that I have to file tax return with them for the year of 2021. 
I have been using turbotax for more than 5 years now.  
The software prompted me to file for CA in the year of 2020 but completely ignore it for 2021 and 2022. I would like to know whether turbotax has some explanation to this and whether they will be reimbursed for the penalty that occurs because their software failed to do so. 
Before coming at me that I need to know which state I need to file for, I did explicitly check for it in 2021 and I am sure turbotax said I don't have to. Now, I have received a noticed from the state of CA that I missed filings for the year of 2021 and probably a 25% penalty (number from FTB recorded line). 
I would love to hear people opinion on this and if turbotax is not responsible for it, how do I pursue legal action against them?

I remember at the end of each filing, they said "I can file confidently with them." Now I am not so sure if that is true if an entire state filing is missing and the software fail to tell me about it. 

[Bsch4477]

Do you have a tax question we can help you with?  

[laxustat]

Hm. It is more of logistic question at this point.
How can I be sure that I did not miss other filing in the past at this point and in the future ?  

Or, is there always be a risk that turbotax cannot guarantee which filings I need to file? 

[Bsch4477]

I’m not aware that the program tells you if you have to file for a certain state. Can you find that instruction somewhere in the program and let us know where it is?

[Mike9241]

@laxustat Depending on what version you used there may have been a screen that asks did you make money in  any other state (Other than resident state)? if you answer yes then it asks for the state. Only states with a personal income tax appear.  you select the state(s) then when you get to the state section it should ask about adding those state returns to your return.

[BillM223]

Normally, TurboTax asks you to add a state return, based on where you say you live, and state withholdings indicated in boxes 15-17 on your W-2. In addition, there are much less common places that would indicate that you might owe tax to a state other than where you live.

Based on these entries, TurboTax would normally ask you if you want to file a state return. Even without this, as Mike notes, most state interviews also ask you if you made money in another state, even though there was no flag to trigger TurboTax to add the state.

I have to wonder, though, if the notice from the CA Franchise Tax Board is correct. Why do they think that you should have filed a CA return? Did someone send them a tax form that referenced CA? Did you formerly live in CA in 2020 but move out, but the state didn't notice? Please note that "domicile" (residency) once determined is not changed until you take positive steps to show that you have changed your domicile; this means that CA thinks that you owe them a return until you prove that you changed your domicile.

So what kind of return does CA want, resident or non-resident?

In any case, since they sent you a notice, you should reply to them asking what type of return they think that you should file and why. Their justification might be quite enlightening.

[ijcthibau]

Did you find a resolution?  Thank you!