Monday, August 23, 2010

Philadelphia Socks It To Bloggers?

If you want to do business in Philadelphia, you have to pay a $300 business privilege license fee. It's a one-time fee and the city now appears more than willing to extend the fee to bloggers to raise money for the cash-strapped city.

That's raising the ire of some folks, especially when the possibility of actually making money from the blogging is limited.
In May, the city sent Bess a letter demanding that she pay $300, the price of a business privilege license.

"The real kick in the pants is that I don't even have a full-time job, so for the city to tell me to pony up $300 for a business privilege license, pay wage tax, business privilege tax, net profits tax on a handful of money is outrageous," Bess says.

It would be one thing if Bess' website were, well, an actual business, or if the amount of money the city wanted didn't outpace her earnings six-fold. Sure, the city has its rules; and 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.

When Bess pressed her case to officials with the city's now-closed tax amnesty program, she says, "I was told to hire an accountant."

She's not alone. 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 privilege license, plus taxes on any profits they made.

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

Barry's music-oriented blog, Circle of Fits, is hosted on Blogspot; as of this writing, its home page has two ads on it, but because he gets only a fraction of the already low ad revenue — the rest goes to Blogspot — it's far from lucrative.
Curiously, the solution proffered by Andrea Mannino of the Philadelphia Department of Revenue is to consider the annual $50 fee option rather than the lifetime option. Yet, that actually becomes more expensive if you plan on blogging for more than six years. She believes that the mere act of putting an advertisement on the blog makes it a business.

The end result of this will less revenues for Philadelphia as people see the anti-business position and move outside Philadelphia to avoid the extraneous charges and harassment by tax officials for the possibility of income derived from advertising. Moreover, such income derived from blogging would be picked up on the personal income tax returns so it isn't like the Department of Revenue isn't getting money from those businesses actually deriving income from website operations like blogs.

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