Yikes. Getting that kind of letter from the IRS is never fun. I got one several years ago and spent a whole weekend sweating it (I checked my mail as we were headed out of town) before I was able to look into it. In my case, too, the IRS was right. I'd overlooked some rule or forgotten to report some item of income. I wrote them a prompt letter acknowledging the mistake and asking them to tell me how much I owed with interest and penalties added to the balance. I think because I didn't fight them on it they waived the interest and penalties "in the interest of fairness" (their words).

Likely, too, it helped that the amount of tax I failed to pay was a small fraction of my overall federal income tax burden, less than 2% IIRC.

Good luck with your situation!