What should I do if I bought a car a year ago and NYS Department of Taxation wants more taxes?

I bought a car from a friend for $5000 and payed $500 in vehicle transfer tax. Now I've got a letter saying my price from the Tax Office was not justified and I need to pay an additional $1160. I really did pay $5000 and we both signed a DTF-802 saying the price was $5000. We did not tick that "below fair market value" box though. It was a 2004 Honda CR-V with 7000 miles.