Today, we received 2 letters from the IRS penalizing us an additional $5000 each for frivolous returns related to tax year 2004 that were allegedly submitted by us in August 2007. Trouble is, we did not submit ANYTHING to them in August of 2007. We have not filed anything that could possibly be considered frivolous since mid-2006.
We did submit (in June 2007 during the OIC process) accurate returns for 2004 which were processed with the tax/penalties/interest assessed several months later. We do have an outstanding balance for that year.
I just don't understand this and the letters say that our only recourse is to pay the $10,000 and then take it up with the tax court. Sadly, I don't have 10K just laying around

Thanks in advance for any words of wisdom.