I Wouldn't concede anything at this point.
A few years back we had the IRS claim we owed them some money. My wife made it through several lower level extortion agents, eventually a supervisor and went line by line down the tax form finally reaching the conclusion that their claim that we owed money was incorrect.
I obviously don't know your situation, but understand you are dealing with a greater level of incompetent bureau-rats than one can even imagine.
Many years ago (25? 30?) my first wife (now ex) got a "friendly" letter from the IRS saying she "owed" them. She ignored it and nothing ever came of it. Makes me wonder if they sometimes send out letters hoping someone will be scared into confessing or something.
I think that is precisely the case. More often than not.