What happens when mom dies and owes taxes?

You are best off taking care of this in a timely matter, else you will also owe penalties. "You" being the benefactors of the estate that was divided up without paying the debtors first. The IRS was owed tax money, that debt should have been satisfied. The fact the money is spent is irrelevant to the IRS.
Get in front of this, so the problem does not compound.

The executor should contact the IRS and send them a certified copy of the death certificate. If it is a small amount, it will end there.

How you were able to take her name off everything without probate of her estate is perplexing. Who ever administered her estate could be held liable for that tax bill.

If the money was in her name when she died, then I'd assume she still owes the taxes and her estate will have to pay or whoever inherited the money she had before she died. Just taking everything out of her name after she died won't wipe out debt if she had the money in the first place. You may want to check with a CPA or an elder law attorney to be sure, since laws change all of the time and this is not my area of expertise, but to the best of my knowledge the money will have to be paid.
Good luck,
Carol