When the IRS finds an income deficiency, they calculate a preliminary tax assessment, but it is not always accurate, because they may not know about deductions or special circumstances.
I suggest that you prepare an amended return to see if the tax owed that you calculate is the same as the tax owed calculated by the IRS.
If your numbers match, just mail a check. You don't need to amend, the IRS will adjust your records for you.
If you disagree about the amount of tax owed, mail the amended return, a letter of explanation, and a check for the adjusted amount, to the address from the notice (not the usual amending address). (Note that if the amount you owe is different, the penalty will be different. Just pay the tax and let the IRS bill you for the recalculated late fee.) Amending instructions are below.
You can always ask for mitigation of the penalty, I don't know how often that is granted though. Unless you had some special circumstance that interfered with reporting the income, you probably owe the penalty.
Amend https://ttlc.intuit.com/replies/3288565
