IRS audit just slammed me $17K penalty. I filled married but single living in a house more than 550K in 2008.?

In 2008, the limitation for deducting interest on housing was not met. (Turbotax did not raise the flag) So, they removed all the deductions which lead to this big value. Should I appeal and request to refile married to get all the entitlements. Can I still refile 2008 return in mid 2011? Should I be able to appeal by myself or I should hire a lawyer. How Do I go about apealing if I should.