I own a business and owe back taxes. I also have a job with a 401k. Can I use the money that I have in my 401k to pay those back taxes? I know there are penalties, but what if the IRS decides to take the money in my 401k - are there still penalties?

If you WITHDRAW the money to pay the back taxes, the 10% Early Withdrawal Penalty applies, PLUS you pay taxes on the withdrawal.

If you BORROW the money, there is no penalty AND no taxes as long as you pay the money back.

If the IRS directly garnishes the 401K, there is NO 10% Early withdrawal Penalty, but you WILL have to pay taxes.