The IRS added a new Business Rule (or rejection code) that will reject a return with wages in Box 16 of Form W-2 Wage and Tax Statement, if either the state abbreviation or state ID field is missing. The alert you see is looking for valid data, and the TaxAct® program no longer accepts all 0s. You can enter any of (1) None, (2) Not Applicable, or (3) 000000001 for the State ID No. to surpass this alert.
Note that any link in the information above is updated each year automatically and will take you to the most recent version of the document at the time it is accessed.