My father in law lives with us, and has now for almost 6 months. He is a war vet and doesn't work. He is not on disability, but does get V.A. Benefits. He does owe a large amount of money for years of back taxes. Is it wise to claim him as a dependent on our joint return? Will the govt come after us for his back taxes?

If you provided more than half of the support of your father in law and he did not earn more than $3650 in 2010 you can claim him.
IRS will not come after you.

Agreed; the IRS will NOT come after you.

However, once they notice that he is dependent on YOU, the IRS may go after his VA benefits to pay the back taxes, because he will have NO ARGUMENT that he need the money to maintain his standard of living above the pverty level.

So he could loose his VA benefits? He is not working and that is only source of money. He doesn't collect disability or social sec. yet either. But we do provide a lot of his expenses.