Question about paying down debt vs. using $ for down payment

[Leslie C.]

My husband and I were intending to buy our second investment property.  However, we have filed to pay taxes late this year because we owe a big chunk of money to the IRS.  I am wondering if we should create a payment plan with IRS to pay it off over several years, so that we can have money available to invest in an next investment property or should we just pay off the IRS?  We've also been approved for SBA loans at 3.75% (to be paid back over 30 years). 

If we pay off the IRS this year (instead of opting for a payment plan).  It will wipe out all our cash reserves that we had set aside for investing in real estate (approx 40K).  I would greatly appreciate any thoughts/insights that any of you might have to offer.   Thanks so much!