Further Thoughts On Philadelphia’s So-Called “Blogger Tax”

Vivian Paige, a Virginia blogger who also happens to have a background in accounting and tax preparation, makes this observation about the so-called Philadelphia “blogger tax” that I wrote about yesterday:

The devil, as always, is in the details:

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.

Let me guess: each one of these people filed a Schedule C (pdf). Probably did so to claim expenses, like their internet service, or to deduct the cost of a computer, most likely on the (bad) advice of a friend or even an accountant.

A Schedule C is entitled “Profit or Loss from Business” for a reason. From the instructions (pdf):

An activity qualifies as a business if your primary purpose for engaging in the activity is for income or profit and you are involved in the activity with continuity and regularity. For example, a sporadic activity or a hobby does not qualify as a business.

So by completing Schedule C, you are acknowledging that this is not a hobby. And guess what most localities – including every one in Virginia – require? A business license.

So, what we’re dealing with here is a generally applicable law that requires all persons operating a business in the city to obtain a license and pay a fee. It’s not an effort to “go after” bloggers, and considering the fact that the people quoted in the article had already declared themselves as operating a business with the IRS, I honestly don’t see what the story is here.

FILED UNDER: Blogosphere, Economics and Business, Quick Takes
Doug Mataconis
About Doug Mataconis
Doug holds a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May 2010. Before joining OTB, he wrote at Below The BeltwayThe Liberty Papers, and United Liberty Follow Doug on Twitter | Facebook

Comments

  1. D.C. Russell says:

    Does Doug know that each of these people filed a schedule C? If so, what is his source?

    Or is he really just guessing? If that’s the case, it is hard to take this posting seriously.

  2. PD Shaw says:

    D.C. Russell, it makes sense, how else would Phili know who was blogging in their city?

    * * *

    The fact that the Schedule C requires one to state one’s address of business answers my question about how a nexus between the activity and the city is established.

  3. PD Shaw says:

    Here’s confirmation:

    “The uproar began after the city Revenue Department recently sent out letters to Philadelphia residents who reported business revenue with the Internal Revenue Service but hadn’t gotten a city business license.”

    http://seattletimes.nwsource.com/html/businesstechnology/2012704171_apustecbloggerstaxes.html

  4. James Joyner says:

    Oddly, I’ve filed Schedule C for years and it never occurred to me that I needed a license. Nor has my accountant ever mentioned it.

  5. There are exemptions to all of this too, depending on which jurisdiction you live in.

    That said, $ 300 for a business license regardless of how much revenue the business generates is a ridiculous amount of money. Then again, that’s Philly

  6. PD Shaw says:

    It looks like it’s $50 per year, or $300 for life.

    I just don’t think our city has that kind of license requirement for non-retail operations. It seems that once a home-based business starts having potential issues with parking, your use has to be approved and a fee charged for the use. I could be wrong though.