No no, I'm sorry, I thought you understood already. I explain this in more detail here:
http://www.creationliberty.com/articles/501c3.phpI've recently rewritten that into a full-length book, so there are many more details I've tried to explain as simplistically as I know how.
Federal Income Tax is on the basis of the word 'income', which is legally defined as "gain by corporate profit." Thus, wages, are not "gain by corporate profit," and therefore, no American citizen has any legal obligation to pay income taxes from their wages, and there is no law that requires them to do so. People file income tax returns at their discretion, meaning they have a choice whether or not they want to do it.
Corporations, like businesses, do have to pay income taxes, and income taxes are supposed to go towards funding our military to defend our country. (i.e. If businesses want to flourish, they need protection from outside invaders, and since we were supposed to have a militia of citizens to protect themselves, the military was to be funded by corporate businesses.) Thus, when a church decides to file 501c3 and gain corporate status, they now because a business that is a branch of the federal government, and so they would then, under normal circumstances, be required to pay income taxes, but they are given an "exemption" from them.
In short, we who are of Christ have no need for an exemption because we don't owe those taxes, but when a 501c3 corporation forms, they have a need for an exemption because they owe those taxes. Therefore, Jack's error was that he presumed he owed taxes that he didn't owe in the first place, and instead of judging the matter by whether or not it was Biblical to yoke up with the government and every other 501c3 entity, he was thinking more about money, falsely believing that he was "paying more" to be free, which is not the case.