Philadelphia’s Blogger Tax: An Update

A couple of months ago the blogosphere lit up with angry alarm when the city of Philadelphia sent out a handful of notices to local bloggers demanding that they pony up $300 for a business privilege tax in order to keep blogging regardless of how much – or how little – they earned.

Federal law requires the reporting of all income, no matter how small, and bloggers dutifully did so causing the Philadelphia Revenue Department to automatically issue letters to bloggers demanding they pay for the $300 one-time business privilege license. The bloggers were shocked to realize they were required to pay the hefty fee even when they’d earn microscopic sums from ad networks.

They shouldn’t have been surprised. The Philadelphia Revenue Department is known for its ruthless pursuit of tax evaders, and has many checks and balances in place to catch even the smallest scoff law – and that includes those that blog for a hobby.

While I no longer live in the Philadelphia city limits, I did work as a freelance writer while living in the city, and yes, I had to pay the $300 business privilege tax, as did my husband (also a freelancer). We also had to pay a wage tax and a net profits tax. This issue was one of the major factors that drove our move to the suburbs. There is no doubt that Philly suffers a brain drain because they charge so much for the “privilege” of doing business within the city.

After the initial uproar about the “Philly Blogger Tax” the Mayor’s press office held a small cocktail party with bloggers to address the issue. I spoke to Katie Martin in the press office and she said:

“We were never targeting bloggers. The IRS provided us with information regarding deductions taken by the bloggers, so the letters were sent out. Now we are offering on-going education efforts to bloggers so they better understand the law.”

Philadelphia City Council members Bill Green and Maria Quiñones-Sánchez introduced legislation on November 4th that would eliminate the Business Privilege Tax for those businesses that earn less that $100,000, which would include most blogs. This legislation is part of an attempt to do a larger overhaul of the city’s tax code.

The Business Privilege Tax has been on the books since 2002 when state law allowed the city to impose the tax. With any luck, Mr. Green and Ms. Quiñones-Sánchez will be able to push through this legislation and better encourage tech savvy companies and bloggers to do business in Philadelphia.

Bloggers still need to take the time to understand that when they slap ads up on their site, they are doing more than just earning a few dollars of pocket change – they are stepping out of a hobby and into a revenue-generating business. With any luck, the furor created by the bloggers may actually lead to real change in the city’s tax law – which benefits ALL business, not just those of us that hang out on the internet.

About Cecily Kellogg

Cecily Kellogg has worked in marketing and public relations in some capacity for fifteen years, and now focuses primarily on digital marketing. Cecily has been writing since she could hold a pencil and now creates web content for a wide variety of sites. Cecily is also know for her irreverent wit on twitter as @CecilyK, and her personal blog UppercaseWoman.com, but she can also be found at CecilyKellogg.com and CecilyK.com. Because you can’t have too many blogs.

Website: http://www.UppercaseWoman.com