In the case of Commissioner of Internal Revenue v. Wodehouse (1948), British author P.G. Wodehouse was under scrutiny for his tax obligations in relation to royalties earned from his works published and sold in the United States while he resided abroad. The Supreme Court ruled that nonresident aliens, such as Wodehouse, were subject to U.S income taxes on royalties derived from copyrights on books printed and sold in America, even if they did not set foot within its borders during the taxable year. This decision clarified that these earnings constituted income "from sources within the United States" according to Section 119(a) of Revenue Act 1936 and thus were liable for taxation by American authorities regardless of where an individual lived or worked.

In the dissenting opinion for Commissioner of Internal Revenue v. Wodehouse, Justice Jackson disagreed with the majority's interpretation of tax law and its application to P.G. Wodehouse's income from his literary works. He argued that U.S. tax laws were not meant to apply globally and should only be applied to income earned within U.S borders or by American citizens abroad, rather than foreign nationals earning money outside the United States like Wodehouse who was a British subject residing in France at that time. Furthermore, he contended that extending taxation rights beyond national boundaries could lead to double taxation issues and international disputes over jurisdictional matters which would complicate international relations unnecessarily.