To make sauce: Combine tomato sauce, onion, red and green bell pepper, sugar, lemon juice, parsley, garlic, Italian seasoning blend and pepper in a large saucepan. Simmer over medium-low heat for 30 minutes.
To make meatballs: Puree potato, onions, egg whites, Italian seasonings, garlic, salt and pepper in a food processor or blender until smooth. Transfer to a large bowl. Add turkey and mix thoroughly. Shape the mixture into 1-inch balls.
Add the meatballs to the sauce. Shake to coat meatballs with sauce. Partially cover and simmer on low heat without stirring for 30 minutes. Uncover and simmer until sauce thickens, about 30 minutes longer. Shake the pot several times during cooking to avoid sticking.
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