You were required to file the Property tax adjustment claim (Form HS -122). This form could be filed separately from your State income tax return.

Here is the link to details on this form-

http://www.state.vt.us/tax/propertyadj.shtml

It seems that you missed to file this form while using turbo tax to file your State income tax return hence you were not allowed an adjustment on the tax claim.

I would suggest that you contact the Town and inform them of the error that you presumed that the form was filed with the Tax return while it was not. You need to provide them information on the hardship you may face as a result. The town may be willing to work with you on this.

Here is a link to some Q& A on this issue- (See page 9 and 10)

http://www.state.vt.us/tax/pdf.word.excel/misc/responses.2008%20UVM%20TAX%20SCHOOL.pdf

Let me know if you have any question.

Please note: This advice is provided with the understanding that all the relevant facts have been provided by you. Any change in facts might affect the advice given and hence may not be relied on in such cases. Nothing contained in this reply was intended or written to be used, can be used by any taxpayer, or may be relied upon or used by any taxpayer for the purposes of avoiding penalties that may be imposed on the taxpayer under the Internal Revenue Code of 1986, as amended.

Turbo tax software has the capability to create and efile such form. However it needs your responses to the various questions as it takes you through the process. It is possible that there may not some input error.

Turbotax warns you if there is a mistake. However, if based on your response to the questions it determines that there is no error than it will not show any red flag.

It is a software after all.

I would suggest you to contact the Town and get some relief on the Property tax due.

Let me know if you have any question.

Please note: This advice is provided with the understanding that all the relevant facts have been provided by you. Any change in facts might affect the advice given and hence may not be relied on in such cases. Nothing contained in this reply was intended or written to be used, can be used by any taxpayer, or may be relied upon or used by any taxpayer for the purposes of avoiding penalties that may be imposed on the taxpayer under the Internal Revenue Code of 1986, as amended.

The only thing I can think of is that you probably did not select the option or provide information that would generate such a form.

I can understand the frustration that you have over this issue due to the unexpected liability.

Unfortunately I cannot provide more information on the software related issues that you had and hence I will opt out so that other expert can address your question.

Let me know if you any other questions.