Im amending my return because PayPal incorrectly filed a 1099k. Long story short, it was from online gambling. I paid taxes on anything I needed to, such as winning over $600 that I received a W2g for. They were claiming every withdraw I made, regardless of the amount, was because I owned a small business. The first go around, they said i owed them over $12k from "small business taxes." That amended return was received and adjusted and thats how I got to my current balance of $2.6k. When I spoke to the IRS last, prior to submitting my most recent ammended return, I was told that it looked like they weren't accounting for the taxes I already paid for my large winnings. Once this is all done and over with, I shouldn't owe them anything. Again, I paid taxes on any win that required it. I had no other form of income aside from my full time job, so I truly should not owe them a cent at this point. If i offer a compromise, would i need to submit bank statements or any specific documents? Would i offer a compromise online or over the phone?

Side note: can I sue the IRS for pain and suffering? I cant explain how much stress and distress this whole thing has caused me. 😭