Sunday, August 22, 2010

Your blog may cost you real money

Mod-Blog has resisted the rush to Google Ads that many blogs have followed for one simple reason - we view this site as a hobby, not a business, and don't want to subject our readers to intrusive advertising. It turns out that may have been a better idea than we even though, as now some cities are charging bloggers for business licenses, even if they only make a few dollars per year! One blogger, who had made $11 in 5 years, is now being ordered to pay a $300 "business privilege tax" by the city of Philadelphia.

The city disagrees. Even though small-time bloggers aren't exactly raking in the dough, the city requires privilege licenses for any business engaged in any "activity for profit," says tax attorney Michael Mandale of Center City law firm Mandale Kaufmann. This applies "whether or not they earned a profit during the preceding year," he adds.

So even if your blog collects a handful of hits a day, as long as there's the potential for it to be lucrative — and, as Mandale points out, most hosting sites set aside space for bloggers to sell advertising — the city thinks you should cut it a check. 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. The same rules apply to freelance writers. As former City Paper news editor Doron Taussig once lamented [Slant, "Taxed Out," April 28, 2005], the city considers freelancers — which both Bess and Barry are, in addition to their blog work — "businesses," and requires them to pay for a license and pay taxes on their profits, on top of their state and federal taxes.
This is what happens when the blanket moratorium on internet taxation is allowed to expire. Expect more shenanigans like this as cash-strapped municipalities look for any way to squeeze cash from its citizens.


BH said...

People will not stand for so many taxes. It has been the toppling of many a great nation and I fear that ours is on the edge.

CRCHAIR said...

These kind of taxes stifle innovation. There are many small businesses that have started as a hobby and ended up employing many people. Often the people had no idea that they would be able to start a real business from the hobby.

This reminds me of the recent story of a city wanting a business permit for an 8 year old girl who had a lemonade stand.