Small Blogs Taxed Above Income Level As Business In Philadelphia - $11 Profit Blog Must Have $300 License

From the Washington Examiner: The City of Brotherly Love is treating hobby bloggers like any other business – bloggers who have low traffic, hobby blogs are receiving notices from the City that require a $300 fee for a so-called “business privilege license”. Anyone who blogs for passion, be it politics or tips on gardening, are not, as a general rule, trying to make a buck out of it, rather, it is a hobby. With most blog platforms, one can run “Google Ad Sense” or similar advertising (income) platforms, which said program then has the “potential” to allow bloggers to receive compensation from advertising placed on their blog. Generally speaking, one must generate thousands of “hits” to realize a payout – how large of a payout? According to one blogger assesed the $300 fee - his earnings were $11 over two years.

That said, rules are rules, and the City of Philadelphia has one particular business rule, which follows that even if one has the potential to make a profit, they are to have a “business privilege license”. The bloggers dutifully filed the income, from their blogs with tax returns – however, are now shocked to learn that their hobby blog is considered a business venture. The crux of the article is that the license fee is significantly higher than any profits realized for their blogs - therefore unfair.

City Governments, State Governments and of, course, the Federal government, need to find ways to support themselves in a lifestyle to which they have become accustomed, and as they generate no income what-so-ever, the taxpayer is at risk at every turn, and now in Philadelphia, that applies to hobbies. It would be fair, if there were a thresh hold as to what constitutes a business in Philadelphia, however, there is not. Therefore, the disparity in the fee and the income derived from the blog can be stunning to hobby bloggers who did not anticipate being considered a business.

Ignorance of the Law being no excuse in court, the only option one can see available to those Philadephia "priveldged" bloggers is to file a Federal Section C, Business Profit and Loss Statement and be sure to apply for a
federal tax ID number through the state (a Social Security Number is sufficient, but..one can see the humor in this).

The purpose of a schedule C is to prove a point. There is a limit on the number of times a business can file a loss, (in the neighborhood of 5 years). Therefore, the license is an expense, the profit negligible at best, the business has a loss. Computer repairs, an expense, internet café charges, an expense – this serves two purposes: One, it will reduce any amount of Federal Tax owed (or State and Local Tax based on Federal Tax), as one’s overall income is reduced from the loss. Secondly, if one shows a loss of income for 5 years, the Federal Government considers that business a “hobby” – and not a business. This sets up a viable argument, one might one might be able to make if they happen to be an hobby blogger - a case to the City – in Court.

It may be worth the wait. To any other bloggers who live in a City that requires a business license for potential income – take note.