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Thanks, I just educated myself by doing a search on Brushaber. Here is what I found.

Shrugging off these defeats, Schiff ventured into court once again. Schiff vs. U.S. 73 AFTR 2d Par 94-517 (U.S. Dist. Ct. 1989). This time in a civil case in which he was hit with civil fraud penalties, he claimed that the IRS could not assess taxes against him. The tax system is unconstitutional; and he sincerely believed that he was not required to pay tax. Predictably, he lost again on all counts. The court made the following findings and conclusions:
1. Schiff failed to file an accurate tax return, so his voluntary assessment was zero. Once the IRS filed a zero assessment tax return for the taxpayer, the IRS could then assess a deficiency (an additional amount of tax) against Mr. Schiff.
2. Schiff was given the right to contest the deficiency in Tax Court, which he failed to do.
3. The U.S. tax laws are constitutional. With respect to this argument, the court made the following succinct observation:
The authority given to Congress to lay and collect taxes, see U.S. Const. Art. Section 8, Cl 1, as modified by the 16th Amendment, allows the imposition of an income tax without limitation. The 16th Amendment removed the limitation on Congress’s authority to impose a direct tax only if proportioned among the States, stating the "Congress shall have the power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several states, and without regard to any census or enumeration." Courts have repeatedly upheld the constitutionality of the 16th Amendment. See, e.g. Brushaber v Union Pacific Railroad, 240 U.S. 1, 17-19 (1916) [The Court upheld the validity of the 16th Amendment, finding that it eliminated the requirement that direct taxes, such as the income tax, on all income from whatever source derived, need no longer be apportioned.
4. Regarding the civil fraud penalty, the court found that Schiff paid no taxes and failed to properly file tax returns. In refuting his claim that he sincerely believed he did not have to pay taxes, the court found that Schiff was an intelligent person with a broad knowledge of tax law, inasmuch as he has written books on the subject and has appeared on television discussing the issue. The court made the following crucial distinction:
The court finds plaintiff's attempts to exculpate himself from the fraud penalty based on the sincerity of his belief that he need not pay income taxes to be without merit. While a failure to pay because of a "misunderstanding of law" may not sustain the imposition of the fraud penalty, "disagreement with the law" provides no defense United States v. Schiff, 801 F.2d 108, 112 (2d Cir. 1986). As the Court of Appeals for the Second Circuit noted, "[t]he distinction [between a misunderstanding and a disagreement] is necessary to the functioning of our tax system. Without it, any taxpayer could evade tax obligations simply by stubbornly refusing to admit error despite the receipt of any number of authoritative statements of the law." Id.
In a prior action involving plaintiff's liability for tax evasion and fraudulent underpayment of taxes, the Tax Court, after reviewing the evidence and considering plaintiff's arguments, concluded:
Petitioner is free to argue his theories to Congress, but he cannot disregard the laws passed by Congress and upheld by the courts, fail to perform an affirmative duty imposed on him by those laws, and then expect to avoid the consequences of his avowedly freely exercised disobedience.
Schiff, T.C. Memo. 1984-223.

Avoid these tax scams like the plague. And avoid other tax scams and expatriation scams and other snake oil scams like the plague. Anyone who tries to tell you differently is playing you like a fool or is a fool himself.

Start with a search under "Brushaber" and go from there....

Actually it pays to start abit earlier:

Hylton v. United States(1796), 3 U.S. 171

"A general power is given to Congress, to lay and collect taxes, of every kind or nature, without any restraint, except only on exports; but two rules are prescribed for their government, namely, uniformity and apportionment: Three kinds of taxes, to wit, duties, imposts, and excises by the first rule, and capitation, or other direct taxes, by the second rule. "

"the present Constitution was particularly intended to affect individuals, and not states, except in particular cases specified: And this is the leading distinction between the articles of Confederation and the present Constitution."

"Uniformity is an instant operation on individuals, without the intervention of assessments, or any regard to states,"

"[T]he DIRECT TAXES contemplated by the Constitution, are only two, to wit, A CAPITATION OR POLL TAX, simply, without regard to property, profession, or any other circumstance; and a tax on LAND."

LICENSE TAX CASES, 72 U.S. 462 (1866)

"It is true that the power of Congress to tax is a very extensive power. It is given in the Constitution, with only one exception, and only two qualifications. Congress cannot tax exports, and it must impose direct taxes by the rule of apportionment, and indirect taxes by the rule of uniformity. Thus limited, and thus only, it reaches every subject, and may be exercised at discretion."

PACIFIC INS. CO. v. SOULE, 74 U.S. 433 (1868),7 Wall. 433

"Congress may prescribe the basis, fix the rates, and require payment as it may deem proper. Within the limits of the Constitution it is supreme in its action. No power of supervision or control is lodged in either of the other departments of the government."

Lane Co. v. Oregon (1868), 74 U.S. [7 Wall.] 71:

[T]he people, through the constitution of the United States, 'established a more perfect union by substituting a national government, acting, with ample power, directly upon the citizens, instead of the confederate government, which acted with powers, greatly restricted, only upon the states.' In no other way can the supremacy of that constitution be maintained. It creates a government in fact as well as in name, because its constitution is the supreme law of the land, 'anything in the constitution or laws of any state to the contrary notwithstanding;' and its authority is enforced by its power to regulate and govern the conduct of individuals, even where its prohibitions are laid only upon the states themselves.

United States v. Cruikshank(1876), 92 U.S. 542:

"The people of the United States resident within any State are subject to two governments: one State, and the other National. ..."

Springer v. United States(1880), 102 U.S. 586

"The central and controlling question in this case is whether the tax which was levied on the income, gains, and profits of the plaintiff in error, as set forth in the record, and by pretended virtue of the acts of Congress and parts of acts therein mentioned, is a direct tax."

"Our conclusions are, that direct taxes, within the meaning of the Constitution, are only capitation taxes, as expressed in that instrument, and taxes on real estate; and that the tax of which the plaintiff in error complains is within the category of an excise or duty."

"[W]henever the government has imposed a tax which it recognized as a direct tax, it has never been applied to any objects but real estate and slaves."

"If the laws here in question involved any wrong or unnecessary harshness, it was for Congress, or the people who make congresses, to see that the evil was corrected.
The remedy does not lie with the judicial branch of the government."

POINDEXTER v. GREENHOW, 114 U.S. 270 (1885)

It was said by Chief Justice CHASE, speaking for the whole court in Lane Co. v. Oregon (1868), 74 U.S. [7 Wall.] 71, 76, that the people, through the constitution of the United States, 'established a more perfect union by substituting a national government, acting, with ample power, directly upon the citizens, instead of the confederate government, which acted with powers, greatly restricted, only upon the states.' In no other way can the supremacy of that constitution be maintained. It creates a government in fact as well as in name, because its constitution is the supreme law of the land, 'anything in the constitution or laws of any state to the contrary notwithstanding;' and its authority is enforced by its power to regulate and govern the conduct of individuals, even where its prohibitions are laid only upon the states themselves.

Pollock v. Farmers' Loan and Trust Company, 157 U.S. 429 (1895)

"The people of the United States constitute one nation, under one government, and this government, within the scope of the powers with which it is invested, is supreme."

"Without the States in union, there could be no such political body as the United States. Both the States and the United States existed before the Constitution. The people, through that instrument[the Constitution], established a more perfect union by substituting a national government, acting, with ample power, directly upon the citizens, instead of the confederate government, which acted with powers, greatly restricted, only upon the States."

POLLOCK v. FARMERS' LOAN & TRUST CO., 158 U.S. 601 (1895):

"We have considered the act only in respect of the tax on income derived from real estate, and from invested personal property, and have not commented on so much of it as bears on gains or profits from business, privileges, or employments, in view of the instances in which taxation on business, privileges, or employments has assumed the guise of an excise tax and been sustained as such."

"If that[rents from land] be stricken out, and also the income from all invested personal property, bonds, stocks, investments of all kinds, it is obvious that by a r the largest part of the anticipated revenue would be eliminated, and this would leave the burden of the tax to be borne by professions, trades, employments, or vocations; and in that way what was intended as a tax on capital would remain, in substance, a tax on occupations and labor. We cannot believe that such was the intention of congress."

"We do not mean to say that an act laying by apportionment a direct tax on all real estate and personal property, or the income thereof, might not also lay excise taxes on business, privileges, employments, and vocations. "

Our conclusions may therefore be summed up as follows:
First. We adhere to the opinion already announced,-that, taxes on real estate being indisputably direct taxes, taxes on the rents or income of real estate are equally direct taxes.
Second. We are of opinion that taxes on personal property, or on the income of personal property, are likewise direct taxes.
Third. The tax imposed by sections 27 to 37, inclusive, of the act of 1894, so far as it falls on the income of real estate, and of personal property, being a direct tax, within the meaning of the constitution, and therefore unconstitutional and void, because not apportioned according to representation, all those sections, constituting one entire scheme of taxation, are necessarily invalid.
Mr. Justice WHITE, dissenting.

16. The injustice of the conclusion points to the error of adopting it. It takes invested wealth, and reads it into the constitution as a favored and protected class of property, which cannot be taxed without apportionment, while it leaves the occupation of the minister, the doctor, the professor, the lawyer, the inventor, the author, the merchant, the mechanic, and all other forms of industry upon which the prosperity of a people must depend, subject to taxation without that condition.

Champion v. Ames(1903), 186 U.S. 321

'But if what Congress does is within the limits of its power, and is simply unwise or injurious, the remedy is that suggested by Chief Justice Marshall in Gibbons v. Ogden [21 US 1, 9 Wheat. 1, 6 L. ed. 23], when [195 U.S. 27, 56] he said: 'The wisdom and the discretion of Congress, their identity with the people, and the influence which their constituents possess at elections, are, in this, as in many other instances, as that, for example, of declaring war, the sole restraints on which they have relied, to secure them from its abuse. They are the restraints on which the people must often rely solely, in all representative governments."

MCCRAY v. U S, 195 U.S. 27 (1904)

"Let us concede that if a case was presented where the abuse of the taxing power was so extreme as to be beyond the principles which we have previously stated, and where it was plain to the judicial mind that the power had been called into play, not for revenue, but solely for the purpose of destroying rights which could not be rightfully destroyed consistently with the principles of freedom and justice upon which the Constitution rests, that it would be the duty of the courts to say that such an arbitrary act was not merely an abuse of a delegated power, but was the exercise of an authority not conferred. "

Flint v. Stone Tracy Co.(1911), 220 U.S. 107

"The Pollock Case construed the tax there levied as direct, because it was imposed upon property simply because of its ownership."

"As we have seen, the only limitation upon the authority conferred is uniformity in laying the tax, and uniformity does not require the equal application of the tax to all persons or corporations who may come within its operation, but is limited to geographical uniformity throughout the United States. This subject was fully discussed and set at rest in Knowlton v. Moore, 178 U.S. 41, 44 L. ed. 969, 20 Sup. Ct. Rep. 747, and we can add nothing to the discussion contained in that case."

"It is therefore well settled by the decisions of this court that when the sovereign authority has exercised the right to tax a legitimate subject of taxation as an exercise of a franchise or privilege, it is no objection that the measure of taxation is found in the income produced in part from property which of itself considered is nontaxable.

Stratton's Independence, LTD. v. Howbert(1913), 231 U.S. 399:

"'[I]ncome' may be defined as the gain derived from capital, from labor, or from both combined, and here we have combined operations of capital and labor. As to the alleged inequality of operation between mining corporations and others, it is of course true that the revenues derived from the working of mines result to some extent in the exhaustion of the capital. But the same is true of the earnings of the human brain and hand when unaided by capital, yet such earnings are commonly dealt with in legislation as income."

BRUSHABER v. UNION PACIFIC R. CO., 240 U.S. 1 (1916)

"the conclusion reached in the Pollock Case did not in any degree involve holding that income taxes generically and necessarily came within the class [240 U.S. 1, 17] of direct taxes on property, but, on the contrary, recognized the fact that taxation on income was in its nature an excise entitled to be enforced as such"

Stanton v. Baltic Mining Co.(1916), 240 U.S. 103:

"the provisions of the 16th Amendment conferred no new power of taxation, but simply prohibited the previous complete and plenary power of income taxation possessed by Congress from the beginning from being taken out of the category of indirect taxation to which it inherently belonged, and being placed in the category of direct taxation subject to apportionment"

COOK v. TAIT, 265 U.S. 47 (1924)

"[T]he principle was declared that the government, by its very nature, benefits the citizen and his property wherever found, and therefore has the power to make the benefit complete. Or, to express it another way, the basis of the power to tax was not and cannot be made dependent upon the situs of the property in all cases, it being in or out of the United States, nor was not and cannot be made dependent upon the domicile of the citizen, that being in or out of the United States, but upon his relation as citizen to the United States and the relation of the latter to him as citizen."

Lucas v. Earl(1930), 281 U.S. 111:

"The Revenue Act of 1918 approved February 24, 1919, c. 18, 210, 211, 212(a), 213(a), 40 Stat. 1057, 1062, 1064, 1065, imposes a tax upon the net income of every individual including 'income derived from salaries, wages, or compensation for personal service ... of whatever kind and in whatever form paid,' 213(a). The provisions of the Revenue Act of 1921, c. 136, 42 Stat. 227, 233, 237, 238, in sections bearing the same numbers are similar to those of the above."

"There is no doubt that the statute could tax salaries to those who earned them "

U.S. v. CONSTANTINE, 296 U.S. 287 (1935)

" The United States has the power to levy excises upon occupations, and to classify them for this purpose; and need look only to the fact of the exercise of the occupation or calling taxed, regardless of whether such exercise is permitted or prohibited by the laws of the United States or by those of a state. The burden of the tax may be imposed alike on the just and the unjust."

Charles C. Stewart Machine Co. v. Davis (1937), 301 U.S. 548:

The tax, which is described in the statute as an excise, is laid with uniformity throughout the United States as a duty, an impost, or an excise upon the relation of employment.

"But natural rights, so called, are as much subject to taxation as rights of lesser importance. An excise is not limited to vocations or activities that may be prohibited altogether. It is not limited to those that are the outcome of a franchise. It extends to vocations or activities pursued as of common right."

Employment is a business relation, if not itself a business. It is a relation without which business could seldom be carried on effectively. The power to tax the activities and relations that constitute a calling considered as a unit is the power to tax any of them. The whole includes the parts. Nashville, C. & St. L. Ry. Co. v. Wallace, 288 U.S. 249, 267 , 268 S., 53 S.Ct. 345, 349, 350, 87 A.L.R. 1191

House Congressional Record, March 27, 1943, pg. 2580:

"The income tax is, therefore, not a tax on income as such. It is an excise tax with respect to certain activities and privileges (the type 3 and 4 taxes) which is measured by reference to the income which they produce. The income is not the subject of the tax; it is the basis for determining the amount of tax."

Commissioner v. Glenshaw Glass Co., 348 U.S. 426, 429-30 (1955).

"Congress applied no limitations as to the source of taxable receipts, nor restrictive labels as to their nature."

United States v. Melton, No. 94-5535 (4th Cir. 1996)
ARGUED: Lowell Harrison Becraft, Jr.[one of Schulz & Co. legal beagles], Huntsville, Alabama, for Appellants.

The jury heard not only the United States's evidence against the Meltons, but also the brothers' defense that they believed they were not "persons liable" for federal income tax. The jury rejected the excuse, however, and convicted them on nearly all counts.

[Subtitle A] "Section 1 of the Internal Revenue Code imposes a federal tax on the taxable income of every individual.
26 U.S.C. s 1."

[Subtitle A] "Section 63 defines "taxable income" as gross income minus allowable deductions."
26 U.S.C. s 63.

[Subtitle A] Section 61 states that "gross income means all income from whatever source derived," including compensation for services.
26 U.S.C. s 61.

[Subtitle F] Sections 6001 and 6011 provide that a person must keep records and file a tax return for any tax for which he is liable.
26 U.S.C. ss 6001
26 U.S.C. ss 6011.

Finally, section 6012 provides that every individual having gross income that equals or exceeds the exemption amount in a taxable year shall file an income tax return.
26 U.S.C. s 6012.

The duty to pay federal income taxes therefore is "manifest on the face of the statutes, without any resort to IRS rules, forms or regulations." United States v. Bowers, 920 F.2d 220, 222 (4th Cir.1990). The rarely recognized proposition that, "where the law is vague or highly debatable, a defendant--actually or imputedly--lacks the requisite intent to violate it," Mallas, 762 F.2d at 363 (quoting United States v. Critzer, 498 F.2d 1160, 1162 (4th Cir.1974)), simply does not apply here.
Each Melton brother had gross income in excess of the amount requiring the filing of a return in each of the years at issue. Therefore, each was a "person liable."

26 USC 7805(a) Rules and regulations
(a) Authorization - … the Secretary [of the Treasury] shall prescribe all needful rules and regulations for the enforcement of this title [Title 26]…" [26 USC § 7805]

Thus under amplifying Treasury regulations for 26 USC 1, 26 CFR 1.1-1(a),(b)

Sec. 1.1-1 Income tax on individuals.

(a) General rule. (1) Section 1 of the Code imposes an income tax on the income of every individual who is a citizen or resident of the United States and, to the extent provided by section 871(b) or 877(b), on the income of a nonresident alien individual.
(b) Citizens or residents of the United States liable to tax. In general, all citizens of the United States, wherever resident, and all resident alien individuals are liable to the income taxes imposed by the Code whether the income is received from sources within or without the United States.