Philadelphia Demands License Fee and Taxes from Bloggers

August 24, 2010

From the Philadelphia City Paper:

After dutifully reporting even the smallest profits on their tax filings this year, a number – though no one knows exactly what that number is – of Philadelphia bloggers were dispatched letters informing them that they owe $300 for a [lifetime] privilege license [or $50 per year for an annual license], plus taxes on any profits they made.

Even if, as with Sean Barry, that profit is $11 over two years.[…]

Even though small-time bloggers aren’t exactly raking in the dough, the city requires privilege licenses for any business engaged in any “activity for profit,” says tax attorney Michael Mandale of Center City law firm Mandale Kaufmann. This applies “whether or not they earned a profit during the preceding year,” he adds.

So even if your blog collects a handful of hits a day, as long as there’s the potential for it to be lucrative – and, as Mandale points out, most hosting sites set aside space for bloggers to sell advertising – the city thinks you should cut it a check. According to Andrea Mannino of the Philadelphia Department of Revenue, in fact, simply choosing the option to make money from ads – regardless of how much or little money is actually generated – qualifies a blog as a business.

Full story here. Some discussion here.

The city isn’t backing down, although some officials say they will propose a bill in September to exempt the first $100,000 in profits (though it will keep the license fee). Apparently, the city is getting the info from IRS records. One commenter:

This year during the Philadelphia tax amnesty he got a letter from the city’s revenue department telling him he needed a business license. He bought the license, and participated in the Tax Amnesty program to catch up on 9 years of back taxes, all on income of only a few hundred a year.

So I think it’s obvious that they are getting some info from the IRS, or perhaps the PA Department of Revenue, where my partner also reports his self-employed income.


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