He's probably not nearly as SOL as he thinks. As others are already pointing out, he probably just needs to come at it as a "self employed individual". There is tax for this, but also many deductions. A few choice minutes with a tax professional would probably clear up most of his problems.

Unfortunately, those minutes would have been a bunch more helpful before he ended up with penalties for not filing, but again, a good tax professional can probably help him negotiate a more reasonable settlement.