Have you been in a school lately?
My D-i-Ls sister taught 4th grade. 2 yrs ago she told a 4TH grader to sit down. He said "F##k you". Her hubby, a 6'6" cop, came to have lunch with her and spoke to the boy. You know what the kid said? Yup. "F##k you."
I do have respect and order in my classroom, and I have never raised my voice above a normal. When I have had a kid tell me to Eff off, I have a special way of dealing with it that doesn't require me to send him/her to the principal.
I would gather that the reason the kid said that to your DIL's sister is because he says it on a regular basis to the other adults in his life. Can't wait for him to try that with a cop when he's been stopped for a traffic violation.