Just report the income. It is up to you if you want to run the risk of getting thrown in jail. Note that filing a federal income tax is voluntary (they can still throw you in jail somehow), filing a state incoming tax IS NOT. The state has every right to tax you, unlike the federal government.
I doubt that he would pay double taxes. I don't pay taxes in u.s. when adsense is sending me money. I pay taxes in my country only.
This is lame considering that other websites say you don't have to file any income report if you don't make more than $200,000 a year. https://www.thepaypalblog.com/2008/08/proposed-irs-reporting-requirements-become-law/ http://online.wsj.com/article/SB121737220325394931.html.html?mod=2_1581_topbox
Again if you want to try to get away with tax evasion then thats up to you. If you filled out a W9 form with a company, then they are going to report how much they paid you to the IRS in a 1099 no matter what method they pay you with including check, paypal, wire, direct deposit, etc. If you didn't have to fill out a W9 form with the company, then they won't report how much money you made to the IRS. This doesn't mean it's legal to not to report that amount yourself. However, if you want to try to evade taxes then thats up to you.