I receive $20,000/yr in disability. Last year I owed the IRS $28,000, which I've been steadily paying down..?

This question is a little long and has about 2 or 3 parts, so bear with me. I now owe the IRS about $7,000 and will finish it off in another 15 months.I have no other debt, don't owe anything on my house and I want to apply for a home equity loan, which I know I can qualify for. Do I have to list that IRS amount on the loan application? And if I have to and if it will affect the loan, is it wise to cash out my $8,000 401k and pay off the IRS? Most financial advisers say don't cash out a 401k, but mine seems to lose about about $200 every statement. If I had cashed out a few months ago, even with the tax and penalty, I would still have been ahead. Thanks for your advice.