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 and contributed a staggering 16,483 posts before his retirement in January 2020.

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.