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Correct, but there is always tax exempt income. Therefore, you must determine if the "source" of the income then excludes such income from taxation. I believe you will find that in Sec. 861.

Sec. 861 (a)(3) states that gross income includes compensation for labor or personal services performed in the United States. I still don't get it.

Sec. 861 (a)(3) states that gross income includes compensation for labor or personal services performed in the United States. I still don't get it.

There's nothing to "get". Despite all wishful thinking, the income tax is currently the law of the land, and wages are subject to it. The tax evasion crowd would have you (incorrectly) believe that through tortured semantics, when the tax code refers to the "United States", it really means only Washington DC or other federal territories. This is why such cases usually have the evader claiming to be "a resident of the sovereign state of (fill in state name here)".

USCS is not law. You must use 26 CFR not 26 USCS.

http://www.access.gpo.gov/cgi-bin/cfrassemble.cgi?title=200326

Additionally, you must use all of the relevant code.