Assumed guilty until proven innocent. I had a go around with revenuers based on nothing more than their assumptions backed by ignorance. Took almost a year to clear up. I was 100% in the right and their entire thing was hooey. at the end, they never acknowledged anything but eventually they just stopped responding/going after me.
Here is the next letter your FIL will receive (I'll paraphrase).
1) Get naked.
2) Stand in front of this.
3) Turn around.
4) Spread em.
5) Bend over.