<prompt> Human: Hi rpersonalfinance, Im freaking out and would love some guidance on what could be going on.I filed my return in 2016, with a federal taxable income of around 43,000. I sold my house that year for 288,000, and made a profit of around 80,000. Lived there for three years, so I was told I wouldnt be paying Capital Gains tax on the sale. Now, I fucked up and didnt report the house sale on my return. I 10037; own that mistake, I thought that the IRS already took their share when I sold it, yadayada, Im an idiot.A couple of months ago, I got a letter from the IRS about income I didnt report, and they included this house sale. I cooperated and checked the box saying that I sold the house for 288k, and sent it back. I expected to get a letter back from them with the difference I would owe, but I just received it Form CP2000 and its incredibly high - theyre proposing that I owe 114,000 - which includes 90,000 of actual taxes, 18,000 for an under reporting penalty, and 5,500 in interest.How can this be if I only made 80k from the home sale? Do they believe I made 288k from the sale? This seems to be the most likely explanation. Ive called the number over and over and its only automated. I will try the main IRS line in the morning to see if I can talk to someone in person.Thank you so much in advance for your help.  <response>: You do not owe any taxes.The IRS only knows you got 288k, they have not figured out your gain or whether you lived in the house. Even if your gain was 288k, the tax of 90k is rather high, capital gains is only 1537;. Mistakes have been made.You can appeal the decision and show that your gain is 80k and the house was primary residence. You can call and talk to an IRS agent, who will help you out. 