They need to sit down with a tax attorney, The issue with a joint return is that your SIL probably hasn't kept records of his income and expenses so what is entered for his schedule C if he even agrees to enter anything may be way off and even if numbers are entered, if they're out of whack that could flag the return for audit. Another issue with MFS is that she would have to enter his name and SSN. if he doesn't file, the IRS would likely first send letters requesting a return and if he still doesn't, an audit is likely.
