Philly Requiring Bloggers To Pay $300

Kurofuneparry writes "Pennsylvania generally and Philadelphia specifically have had a number of budget issues and some bloggers are seeing the results. From the article: '... yes, cash-strapped cities can't very well ignore potential sources of income. But at the same time, there must be some room for discretion and common sense.'"

Bad Summary in OP

[Stormy Dragon]

If you RTFA, the $300 is the Philadelphia business privelege tax, so she's not being forced to pay for blogging, she's being forced to pay for blogging for money. Which is perhaps ridiculous, but no less ridiculous than it is for any other person in the city who has to pay it.

Re:Not all bloggers, just those that make money

[Volante3192]

Oregon. (key words: this month)
http://www.oregonlive.com/portland/index.ssf/2010/08/girl_at_the_center_of_lemonade.html [oregonlive.com]

Re:So if you post on any forum you need to pay $30

[DarkKnightRadick]

Paying taxes isn't at issue. It's whether or not she needs to have a business license for her blog which generated gross profits of $50 over TWO YEARS.

Re:Lesson learned?

[Shakrai]

$600, not $20,000......

Re:Not all bloggers, just those that make money

[Kalidor]

Sadly, this won't work if she's a citizen and not a greencard holder. The US is one of the countries that taxes income based on both citizenship AND residency.

Doesn't matter if you are outside of the US, the IRS will ask for it's cut unless you are in a country that has a tax treaty with the US (and you fall within the terms of said treaty). Even then, most of the treaties require proof of payment with respect to the taxes due in the other country or the IRS still takes a cut.

If you are in a country without a tax treaty, then you are out of luck as most countries tax based on residency, therefor you are double taxed by the country where the work is done, and the US.

Re:Not all bloggers, just those that make money

[captainpanic]

Why not simply have a certain limit under which you pay no tax?

First 1000 euro/dollar: tax free
Next 1000 euro/dollar: get licence of 300,--
Above 2000 per year: start paying tax as well...

That is just an example. I just mean to say that you'd need a progressive business tax that doesn't kill small initiatives before they make any real money.

Governments should encourage little businesses and initiatives - they make the money go round... and are often maintained by people outside office hours, therefore increasing the average productivity of a country.

Re:Not all bloggers, just those that make money

[iamwahoo2]

In the article, it explicitly states that she does not run a business, which would make blogging a hobby at which she makes a small amount of income. As long as she declares this as part of her personal income, then this is perfectly legal. The business privelige license is for businesses (according to the cities' own website), so it makes no sense that she would need to purchase this license, or pay taxes as if she were running a business.

To make matters more difficult, if she were to attempt to declare this as a business, the IRS would expect her to demonstrate that she intends to turn this into a profitable endeavor, because running a home based business offers tremendous tax benefits and they try to crack down on the number of people who attempt to declare their hobby as a business.

In summation, It looks like the some of the City of Philadelphia employees do not understand their own laws, or tax law, on a most basic and simplistic level.

Re:Not all bloggers, just those that make money

[Shakrai]

On a side note, how does Philadelphia even know what she paid in taxes? That should be confidential information between her and the state and the IRS.

It's not. States and the Federal Government report details from your income tax return to local authorities all the time. How else do you suppose they know when to hold the tax returns of deadbeat Dads or those that owe property taxes?

Re:Not all bloggers, just those that make money

[cptdondo]

The kid made the money *after* they tried to shut her down, and the local businesses stepped in and gave her tons and tons of free publicity. Until her lemonade stand hit the papers, she was just another kid making a few $ a day.

RTFM - Les Schwab and a TV station stepped in and promoted her.

Re:Not all bloggers, just those that make money

[hedwards]

Until, people start winding up at the hospital with food poisoning. The rules surrounding food distribution exist for a very good reason. If you've ever suffered the effects of food poisoning you'd understand why it's so serious.

Re:Not all bloggers, just those that make money

[sglewis100]

Net Income != Profits.

True, but not relevant. When I formed an LLC for my consulting side practice, nobody asked me if I had clients. Presumably, they could care less. Either way, I had to pay the cost of filing.

Re:Lesson learned?

[hedwards]

What you typically do is report the income as miscellaneous, which for small sums of money the IRS is OK with, you still pay the standard income tax rate for your bracket, but they can't come back and say you didn't pay your taxes. Not sure about state income tax, we don't have that here. Last I checked which was a few years back, they didn't really tax this sort of thing unless something was produced in the process. The only tax here on this sort of thing is the B&O tax, which will hopefully finally be repealed later this year in exchange for a select income tax on high earners.

Re:A better way to screw the city ...

[Enry]

Err no. (IANAAOL - I Am Not An Accountant Or Lawyer). Being a non-profit usually requires even more paperwork and associated fees.

But even as a for-profit business she can deduct her business expenses (server time, the portion of rent/utilities dedicated to her home office, etc.). She wouldn't be able to deduct everything, and the amount she saves in taxes may or may not be less than the $300 she had to pay to get the license in the first place.

Re:Not completely outragious...

[Anonymous Coward]

She has adds - adds generate money, therefore the CONTENT being personal is immaterial, it is a for-profit enterprise (she just isn't really making a profit). All these people claiming she isn't really making money therefore she shouldn't need to pay the taxes just need to remember our lovely movie industry where they never "make a profit" because of all the games they play on the 100's of millions of dollars they rake in....should they be exempt from paying taxes on that money as well??!?

Re:Not completely outragious...

[IndustrialComplex]

Unless she is incorporated, it should be considered a personally owned business. Do 17 year olds who mow their neighbors' lawns have to pay this fee? Paying tax on the income ($50) makes sense, but paying $300 for being a business doesn't.

It's PA and more importantly, Philadelphia. That city is an anathema to economic freedom.

Occupational Privledge tax (Sucks if you are an engineer that is underemployed)
Wage tax (4% right off the top)
Hell, I wouldn't be surprised if you needed a permit to apply for a license in Philadelphia.

I lived in the area for most of my adult life, and one thing you learned is that you should avoid the influence of Philadelphia City Hall like the plague. An employer would have to pay me a hell of a lot more to put up with that city.

Isn't it amazing that Philadelphia is doing so well?

Re:Not all bloggers, just those that make money

[Jarik C-Bol]

I poked around a bit more, and found out that the 300$ fee is for a 'lifetime' business license, that would not require annual renewal. The city says that anyone not interested in the lifetime license can pay 50$ a year for an annual license. apparently, there is a bill going up in Philly to make it so that freelancers (like bloggers) won't have to pay taxes on the first 100k$, but will still need the license.

Re:Not all bloggers, just those that make money

[tibit]

Oh boy. The price you sell a used car for is not a capital gain! The capital gain, if any, would be if you'd buy the car for less than you sold it for. When you sell a used car, you typically are at a loss, even if you get a lot of money for it -- since you already gave up even more money when you got it.

Re:Not all bloggers, just those that make money

[commodore64_love]

>>>Until, people start winding up at the hospital with food poisoning.

What part of "the government help the kid come up to code" did you not comprehend? There would have been no food poisoning then. Ya know, it amazes me how people like you wilingly bend-over and lick the boots of politicians, rather than admit the government is squashing us like ants. Why don't we all just live on plantations again, and call ourselves "serfs"?

Being an (ex) blogger from Philly....

[xandercash]

Being from Philly, I have had similar experiences. In my case, my website was registered to a Philly address, so they automatically sent out the "you must have a business license" letter. I was making no money. It's their number one automatic letter. My 3 year old daughter got one, once, even. (we're not sure how, in that case). All a person has to do is call the number on the letter and say "this isn't a business" and they'll put a check-mark in the "not a business" box. They don't care about the miniscule $50 every two months businesses. Just the profitable ones. This is why, when I lived in Philly, I always had a PO box or location outside the limits for business/website purposes. Mostly to avoid the hassle. The current township I live in is MUCH more reasonable, thankfully.