This story is making the rounds.
For the past three years, Marilyn Bess has operated MS Philly Organic, a small, low-traffic blog that features occasional posts about green living, out of her Manayunk home. Between her blog and infrequent contributions to ehow.com, over the last few years she says she’s made about $50. To Bess, her website is a hobby. To the city of Philadelphia, it’s a potential moneymaker, and the city wants its cut.
In May, the city sent Bess a letter demanding that she pay $300, the price of a business privilege license.
Ah but 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.
I have to wonder what exactly Bess reported on her tax return. Her blog is hosted – for free – at wordpress.com. The policy of wordpress.com is that advertisements are not allowed. (My blog is also hosted at wordpress.com. The company runs ads on our sites, that regular visitors do not see but if you find us via a search engine, you will see them. All of the money for those ads goes to wordpress.com, not the bloggers.) So unless she’s got income from her other gig – and the story says she earned money as a freelance writer – she was a bad example.
So enough with the $300 blogging license meme.
I do take exception to this:
According to Andrea Mannino of the Philadelphia Department of Revenue, in fact, simply choosing the option to make money from ads — regardless of how much or little money is actually generated — qualifies a blog as a business.
Unless that is specifically in the code in Philadelphia, that is not the case. Many people had ads on their blogs simply to offset the cost of hosting, and making a profit is not the motive. I simply don’t see how ads alone elevate the operations to that of a business. Perhaps she needs to familiarize herself with the IRS rules.
Of course, the bloggers in the story need to learn the rules, too.