What is the IRS processing fee they were talking about?

This?  There is a $40 Refund Processing charge if you want to have the Turbo Tax  fees deducted from your federal refund.  Or you can pay upfront with a credit card to avoid the extra charge.

What is Refund Processing?
https://ttlc.intuit.com/community/choosing-a-product/help/what-is-refund-processing-service/00/25889

How to remove the Pay with Refund fee
https://ttlc.intuit.com/community/downgrading/help/how-do-i-remove-pay-with-my-refund-fees-in-turbotax-online-and-change-my-payment-method/00/25880

It is not an IRS fee.   It is a fee you pay to a third party bank if you want to pay your TurboTax fees from your federal refund instead of paying upfront before you e-file.   If you pay upfront with a credit or debit card, then you just pay for using the software.  If you choose "refund processing" there is an EXTRA $40 ($45 in CA) fee to have a third party bank receive your refund from the IRS, take out the amount you owe to TurboTax, keep $40 for itself, and send you the rest