Make sure you are using a good accountant. Not just a tax preparer. They can help get the right amount figured out.
The IRS is not horrible to deal with if you deal with them. If you ignore them or dispute things that are indisputable they will kill you.
At this point there have to be expenses associated with coming home to live. But how much of a downpayment did they make to come up with a $40,000 tax liability? Seems like you are talking six figures. Can they grab some equity out of the home now?
They are checking into that today. The biggest problem is that they have 2 weeks to figure out a plan, come up with the money or payment plan and deal with it. I'm going on the assumption that if they owe money they have to set up a plan before April 15th or the penalties will start to pile up. They also have to figure out if it's better to pay interest to the government or to a bank, mortgage company, credit union, maybe even their own thrift plan. The way I see it we'll have years to tell them how badly they botched this up but right now action is critical. Personally I'd rather be deling with a loanshark.