Without at least the Form number I could not begin to suggest info for you.
There are some reasonable opinions here, IMO. It is no laughing matter., but much simpler than many presume. Don't get excited and consider the source.
What you have here is a simple admin. procedure situation. The paperwork against you is computer generated, from a generally dysfunctional data system.
Some years ago IRS was bragging about 7 new computer systems they had contracted and installed that would help streamline fair collection. It shortly came out the systems could not talk to each other ! Some help.
Anyway, a CPA and Tax Service will probably sort this out in short order. If you throw the extra bucks for an Enrolled Agent to represent you it should be a cake walk, as long as your records are in order.
Ordinary Income or Capital Gains ? Depends on the rate I suppose.
Anyway, where I was going. In the event you end up liened anyway here is a check-list I follow. Often gets them stopped quick. Sidestep their attempt to get you in the so called “Tax Court”. It's the first step toward Title 72 suits many spout about. Not that you need to go near that far. Obtaining a Waiver is a must.
Giving Notice of Intent to Sue.
IRS has promulgated regulations that establish procedures to be followed by a taxpayer who believes that IRS officers or employees have disregarded provisions of the tax code in their collection activities. See 26 C.F.R. § 301.7433-1. Specifically, these regulations require that an aggrieved taxpayer must first submit his or her claim "in writing to the Area Director, Attn: Compliance Technical Support Manager[,] of the area in which the taxpayer currently resides," and further require that the claim must include:
 (i) The name, current address, current home and work telephone numbers and any convenient times to be contacted, and taxpayer identification number of the taxpayer making the claim;
 (ii) The grounds, in reasonable detail, for the claim (include copies of any available substantiating documentation or correspondence with the Internal Revenue Service);
 (iii) A description of the injuries incurred by the taxpayer filing the claim (include copies of any available substantiating documentation or evidence);
 (iv) The dollar amount of the claim, including any damages that have not yet been incurred but which are reasonably foreseeable (include copies of any available substantiating documentation or evidence); and
 (v) The signature of the taxpayer or duly authorised representative.
Evans v. United States, 2006.DDC.0000228< http://www.versuslaw.com> ¶¶ 12-17; No. 06-0032 (D.D.C. 2006).
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