Meanwhile we all pay rent to exist.
That is what government does, they make you pay to exist and provide things they will not allow people to provide for themselves, setting standards for how it is done. They take more than society can get by without, and then decide where and to whom to give back some of the money back to. People then compete for favor with them by following thier requirements to be given money. Everyone changes thier policies at the local level to qualify under thier standards to be given some of the taxes they took from society back in the form of federal aid etc. Thousands of people controlling millions of people. It has been so since the dawn of civilization. Thousands cannot control millions directly, they must do so by fear, creating fear necessitates making examples of those that step out of line.
It creates uniform policies and a nation more similar in policies than unique at the state level. If your state wants to be too unique they are cut off from federal funding, but still are required to give the same amount. Giving a large amount but having none returned starves the state who then adopts the standards required to qualify for a return of some of taxes the state pays. If your using federal funds the feds have a say in how you spend it. Thus the feds can technicaly control everything with the power to tax. The incentive at the state and local level to have some of what the people pay in taxes given to them for free in addition to thier own income for projects is great and the politicians stumble over eachother to adhere to federal policies and qualify. So you see the federal government's power is only as great as thier power to tax. Prior to the federal income tax they had limited power as was designed by the founding fathers. Through taxation however the scope of federal power now exceeds state power across the board. Since everything can be twisted to involve interstate commerce at some point, the courts enable them to tax virtualy anything.
As far as the large transactions, that does not necessarily mean they were all profit. Whenever a large amount of cash changes hands a percent of it must be paid in taxes. It does not matter if only 5% of that total was profit and the other 95% covers the cost of the service being provided. Take real estate for example where the profit of someone buying and selling a home might be under $3,000, but the total price was $500,000. Now assume they bought it one month and sold in the next in what was a new fiscal year, of seperate taxes. Technicaly they just made $500,000 income until it is corrected in deductions to adjust for actual profit. However if they filed no tax return the IRS would likely say you owed taxes on that $500,000 because no paperwork has been filed to show otherwise. That $500,000 would put them in the top tax bracket meaning they owed about 50% of it. So they would owe on paper $250,000, when in reality they only made $3,000 profit. So it would be possible to owe more than one made in a given year if the IRS is left to assume because no taxes were filed.
Just because large sums of money are changing hands does not mean a person has money to spare. People starting a business often spends tens of thousands or hundreds of thousands in initial costs, none of which is profit and are loans that must be paid back with interest. Taxes still must be paid on the cash changing hands. Even if they make a normal living, but the income puts them in the top income bracket before the cost is factored in they still owe around 50% of all that cash in taxes if they cannot show expenses. If they didn't file taxes they were not showing expenses. So they can actualy owe more than they made in a given year under this principle. They could have made $30,000 profit in a year but the transaction consisted of hundreds of thousands that they owe taxes on because no tax forms were filed to show it was not all profit changing hands.
With fees and assumptions intentionaly made by the IRS to encourage them to file they could owe millions and be a lower middle class family that won't make that much in the remainder of thier live's. Straightening it all out with the expense of court and lawyers that costs tens of thousands it is very likely they will lose thier home and all thier assets at the minimum. He may have seen this and just flipped, realizing that compliance might lead to a better result, but one he will still be paying for the remainder of thier lives.