DailyTech - Philly Government Demands Small Bloggers Pay $300 for Business License

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Internet Philly Government Demands Small Bloggers Pay $300 for Business License
Jason Mick (Blog) - August 23, 2010 11:38 AM

53 comment(s) - last by Bateluer.. on Aug 24 at 7:59 AM

Even blogs that fail to make a profit are expected to pay up

They say there's only two constants in life -- death and taxes. The latter, at least, has been surprisingly variable in recent years, though, thanks to the digital revolution and how it's changed business. From online sales to internet services, there are many areas of hot debate over what should or should not be taxed in an increasingly internet-connected and internet-reliant world.

The city of Philadelphia is drawing attention after local bloggers complained about new efforts by the city to collect business license fees (essentially a one-time flat business tax) from them.

Philly resident Marilyn Bess was one of those targeted. She runs MS Philly Organic, a small, low-traffic blog on green living. Between the blog and her contributions to ehow.com she's made $50, by her estimation, over the last several years.

Thus she was shocked when the city wrote her demanding $300 for a business license for her blog or threatened to shut down the site. When she applied the city's now-closed tax amnesty program, her pleas fell on deaf ears. She recalls, "I was told to hire an accountant."

Sean Barry's blog Circle of Fits, hosted on Blogspot, was another target of the city. Mr. Barry says that the site has two ads on it, which only draw a minute amount of revenue, which is largely used to cover the hosting costs. He says that the site has made $11 over two years.

Such complaints are just excuse making says tax attorney Michael Mandale of Center City law firm Mandale Kaufmann. He says that any blogger whose page features ads they receive money from is an "activity for profit" and that the licensing fees apply "whether or not they earned a profit during the preceding year."

Bloggers can currently also purchase a $50-a-year license, as an alternative to the $300 lifetime license.

City Council members Bill Green and Maria Quiñones-Sánchez are trying to at least give some bloggers a bit of respite. In June they proposed and initiative that would exempt site owners from paying taxes on their first $100,000 USD of profit. The bloggers will still have to pay the licensing fees, though.

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Unenforcable

By corduroygt on 8/23/2010 11:59:21 AM , Rating: 5

How can they shut the site down as long as it's not hosted in a server in Philly site limits? They have no jurisdiction and have no right. The content isn't child porn or something harmful like that, so if I was the hosting provider (outside of Philly), I'd just laugh my ass off at the city's request.

RE: Unenforcable

By Wiggy Mcshades on 8/23/2010 12:04:51 PM , Rating: 2

They can get a court order to have it shut down, it is illegal to operate a business without a license.

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RE: Unenforcable

By Mitch101 on 8/23/2010 12:45:11 PM , Rating: 3

I should have gone into government so I wouldn't have to think about what I do just make accusations and figure out how to tax people on them.

Checked out her site its nice and informative. Hardly what I would call a business.

I ran into a similar situation in that people think google ads pays people millions and anyone with them on a site rakes in the cash. Even worse I ran the community website with no ads at all but that didnt stop our HOA president telling the community I somehow made tons of money from the website. It had maybe 25-60 visitors a day LOL. The site also used the NO INDEX/NO FOLLOW rules so search engines wouldn't index the site. The site cost me hosting fees and had no method of making money in fact it was built from frontpage in about 10 minutes. But according to him I made tons of money on the community through the website. Just another clueless moron. I had fun ripping him a new one for how moronic he is but since the majority of people are stupid I'm sure some believe him.

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RE: Unenforcable

By gamerk2 on 8/23/10, Rating: -1

RE: Unenforcable

By theArchMichael on 8/23/2010 1:46:41 PM , Rating: 2

I think this proposal sucks...
But gamerk2 is right. It's a slippery slope, if you're conducting business your supposed to have a business license and a registered business name, etc.

They should make the amendment for those generating a small income for the sight, because if your making a $100,000 grand and you don't have a business licence and limited liability entity setup for your business... you're an idiot just waiting to get sued anyway.

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RE: Unenforcable

By HotFoot on 8/23/2010 3:25:15 PM , Rating: 2

I'm not sure of the rules in this jurisdiction, but where I'm from I once had a business license in order to do engineering consulting. It was fantastic. I turned a small bedroom into an office, and wrote off all sorts of expenses. Heating, electricity, even phone/internet bills - all were used, in part, for business use and so a portion of those bills were all written off. The tax savings were awesome.

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RE: Unenforcable

By 3minence on 8/23/2010 2:19:45 PM , Rating: 5

My kid once sold lemonade on the corner. Does she have to get a license? If I drive everyone to lunch often enough and they chip in and buy me lunch, do I have to get a license? My buddy came over this weekend and helped me fix my car in return for beer. Does he have to get a license?

The city, should not charge taxes for what they don't provide. Taxi & truck drivers pay taxes because they use the road. I have a dog license because my city provides animal control. But what does the city provide the small blogger? Nothing.

Governments need to stop thinking they have a right to take my hard earned money and give it to the person that kisses their ass the best.

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RE: Unenforcable

By Donkey2008 on 8/23/2010 2:35:28 PM , Rating: 2

"But what does the city provide the small blogger? Nothing."

That is an excellent point. If the city is not providing a service, then why are they being taxed?

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RE: Unenforcable

By Danger D on 8/23/2010 2:46:49 PM , Rating: 2

Agree. This is nothing more than a cheap money-grab. Pay Philly for the right to do business on the global market when they provide nothing? Pure BS.

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RE: Unenforcable

By System48 on 8/23/2010 3:05:42 PM , Rating: 5

Actually the lemonade stand can be shutdown by a city health inspector for not being licensed.

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RE: Unenforcable

By ssjwes1980 on 8/23/2010 6:15:09 PM , Rating: 2

I remember a news story about that very thing happeneing in the last year or so around New York or somewhere up there in the north.

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RE: Unenforcable

By EricMartello on 8/23/2010 7:11:26 PM , Rating: 1

That's true, and I think Philly was trying to tax sugar but that got shot down. What a load of crap...I do agree that taxation should be limited exclusively to services provided by the city/state/fed...but on that note, how would you explain sales tax and income tax?

Personally I think the best thing to do is to get rid of all these little taxes and make one universal sales tax, say like 25%. That way you are taxed on the money you spend, and some services/goods will be excluded (as it is now). States can tack on an additional percentage onto the federal sales tax. Not only would this increase revenues by eliminating paperwork and tax fraud/evasion, it would make life better for pretty much everyone.

The problem with our government is that they'd happily bump sales tax up to 25% but still try to enforce income tax or something else. Isn't it time for a revolution and massive government clean-up in the USA?

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RE: Unenforcable

By FITCamaro on 8/23/2010 9:34:34 PM , Rating: 3

Welcome to the Fair Tax.

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RE: Unenforcable

By FITCamaro on 8/23/2010 9:33:54 PM , Rating: 2

You're talking common sense sir.

And your kid does need a health department license for that lemonade stand.

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RE: Unenforcable

By corduroygt on 8/23/2010 12:57:35 PM , Rating: 5

When you compare how long it takes to get a court order, vs. how long it takes to move the site to a different host, even out of the country, you'll see that it's a losing proposition. They can't even shut down straight up illegal piracy sites!!!

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RE: Unenforcable

By Inkjammer on 8/23/2010 1:10:52 PM , Rating: 2

But if you're in Philly they know where you live, where your site is hosted. Try circumventing them by moving your site to another country to avoid polices? Cool, they can't shut down your site now, but they can audit you. They'll make your life hell over $10 in Google AdWords because A) you tried to 1-Up them, B) they can claim reasonable suspicion you're profiting off the site, and may be mis-reporting numbers and C) they can.

Again, you still have to report ad revenue on your taxes, business or not, and by those means you're still making money. Making a profit? No, but they can argue you still make money. And for the Pennsylvania Department of Revenue and local government, that's all they need to know.

Granted, this is totally BS over $10 in AdWords, but...

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RE: Unenforcable

By exploderator on 8/23/2010 5:42:24 PM , Rating: 2

If you think how much hassle that $10 costs you, it's a damn expensive $10. Better to just pay $10, have an ad free site, and buy some beer with the other $290 you save by not having to call it a business.

Still, do you really have to have a business license at home if you run a business in another state (out of state servers)?

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RE: Unenforcable

By drycrust3 on 8/23/2010 1:01:45 PM , Rating: 2

You're telling us that their court order covers what their business people do in another country?
Either way, it is well known that people will do almost anything to avoid paying unnecessary taxes. When the English Government introduced a tax on windows (in buildings, not the bugged operating system), all the people living in castles simply blocked up the windows so they paid no tax. The same thing here: people will read the law and either find out how to do blogs without paying this tax or they will find a way to express themselves that isn't in the legislation, and if they can't express themselves at all ... then (and I'm not American) ... America won't be America.

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RE: Unenforcable

By B3an on 8/23/2010 4:18:54 PM , Rating: 1

quote:
When the English Government introduced a tax on windows (in buildings, not the bugged operating system)

*rolls eyes* Begone fanboy scum.

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RE: Unenforcable

By drycrust3 on 8/24/2010 2:23:46 AM , Rating: 2

quote:
Begone fanboy scum

The term "Windows Tax", in the modern context, refers to the difficulty a person has of buying a new computer without a version of Microsoft Windows installed upon it; while in the historic sense the term "Windows Tax" refers to an English tax that came about in 1698.

Here are the links to the two different Windows Taxes:
http://en.wikipedia.org/wiki/Window_tax
http://en.wikipedia.org/wiki/Windows_refund

My apologies for trying to avoid being misunderstood.

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RE: Unenforcable

By Iridium130m on 8/23/2010 12:11:34 PM , Rating: 5

find a friend that lives in the rural area and register there. Do you updates from their house. No longer in jurisdiction.

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RE: Unenforcable

By Spivonious on 8/23/2010 12:37:51 PM , Rating: 1

The court could, in theory, order the hoster to shut them down.

It all comes down to whether or not it is a business. Since they are making money off of the blogs (even if it is a tiny amount), they are running a business. They should be reporting the ad revenue on their income taxes, and they need to be licensed.

There's an easy way to not pay the tax. Take the ads off of the blog.

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RE: Unenforcable

By acer905 on 8/23/2010 12:43:23 PM , Rating: 3

Well then it sounds like its finally time for the Swill Web Hosting service, subsidiary of the Swiss Bank. Host your site with ads, any money generated pays for the hosting fee's first, then auto deposits into your Swiss Bank account. Now you can be like the rich and hide your income in offshore tax-free accounts! (NOTE: I do not in any way represent the Swiss Bank, do not contact me for web hosting. lol)

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RE: Unenforcable

By dragonbif on 8/23/2010 1:32:24 PM , Rating: 2

I would say remove the adds also. The 2 examples both say they make less then $50 a year so it is not worth it.

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RE: Unenforcable

By theapparition on 8/23/2010 1:04:55 PM , Rating: 3

No they cannot shut the site down, but they can arrest you for failure to obtain a business license (extream measure), make you pay late fees, garnish your wages, etc.

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RE: Unenforcable

By walk2k on 8/23/2010 4:27:53 PM , Rating: 2

The person runnng it is physically located in an office/home inside Philly limits, that's why.

I'd say just remove the ads. If you are only making $50 in 2 years why pay a $300 fee for it?

Though I have to say, $300 for a lifetime license is pretty damn cheap. I pay about $150 a year, though it's based on my revenue (with a $50 minimum I believe). Note that's INCOME, not net profit. I've lost money for the last 2 years but still had to pay my business taxes. That's how it works... if you don't like it, don't run a business. Just remove the ads, poof no more revenue, no more business.

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RE: Unenforcable

By gorehound on 8/23/2010 5:07:13 PM , Rating: 2

this is BS.might as well tax some kids washing cars while you are at it.
the blogs are not even in that state hosted that is.just another way for our great government to take more of your income.

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RE: Unenforcable

By FITCamaro on 8/23/2010 9:37:01 PM , Rating: 2

Give them time.

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local governments desperate to tax

By Iridium130m on 8/23/2010 11:53:04 AM , Rating: 3

so much for freedom of speech...sounds like you can't even try to just break even and not have to pay taxes. Wonder if you could sign up to be a not for profit or something.

This total reminds me of the city of Mission Kansas taxing residents and businesses if they have a car parked on their driveway. http://www.kansascity.com/2010/08/18/2159938/missi...
* Already paid taxes on the income used to purchase the car.
* Already paid sales tax to buy the car
* Already pay property tax on the car every year
* Already pay property tax on the property the car is parked on.

Now, if the car is parked their, another tax. Nucking Futs.

RE: local governments desperate to tax

By theapparition on 8/23/2010 1:09:17 PM , Rating: 3

There was something very similar a while back. Some young girls had a roadside lemonaid stand......that is until the police came in and shut them down for not having a $100 permit/business license.

Rural part of town and no way was that causing any sort of traffic or safety problem. Just the clueless elected/appointed members of the local government unable to fathom common sense.

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RE: local governments desperate to tax

By Nfarce on 8/23/2010 2:26:35 PM , Rating: 2

Nobody ever said local, city, state, and federal governments ever had any common sense. Trying to deal with bureaucracies like them is like trying to push a rope...it just doesn't work. Government at all levels is failing America, and instead of them getting their sh!t together and running lean and shore up waste (and fraud), they just go shake down the cash cow John Q. Public a little more each time.

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RE: local governments desperate to tax

By fic2 on 8/23/2010 1:44:55 PM , Rating: 1

To me this is totally nuts. What if you own a home, but don't have a car? I don't know why politicians can't just up the gas tax when they want to pay for road wear and tear. That is the most fair way to tax usage.

I also wonder how much the gov't has to pitch in since it "generates" quite a number of trips a day to pay the freakin' fees they make up.

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RE: local governments desperate to tax

By Iridium130m on 8/23/2010 2:25:46 PM , Rating: 2

problem with upping the gas tax in such a small local area is its very inexpensive to drive a block out of the city to fill up at a lower priced gas station. Defeats the purpose of the tax and kills the local business off.

a driveway tax is much more expensive to avoid, making it more effective in the near term. In the long term, new business simply avoids developing in the city knowing that the tax will eat into their margins, eventually hurting the city unless neighbor cities pick up a similar tax evening the playing field.

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RE: local governments desperate to tax

By Schrag4 on 8/23/2010 2:48:50 PM , Rating: 2

From the article:

quote:

The fee is gradually spreading nationwide because it’s a more direct way to pay for road costs by charging the people and businesses that create the most traffic.

I thought the gas tax was the MOST direct way of charging people by how much traffic they create. This seems like a complicated solution to a problem that already has a simple solution.

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RE: local governments desperate to tax

By System48 on 8/23/2010 3:17:10 PM , Rating: 2

Agreed, although gas taxes are just state and federal taxes. I like the estimation of 9.5 vehicle trips a day from a residence, ridiculous. At most, on the weekends, I may make 4 trips in a day. Week day is either going to be 1 or 2 trips.

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RE: local governments desperate to tax

By Schrag4 on 8/23/2010 5:42:59 PM , Rating: 2

I thought 9.5 was a little high too. However, perhaps they consider 1 round trip as 2 trips (you drive on the road twice after all). Also, families with 3 kids in high school make the average go through the roof with sporting events, etc. 9.5 is high for my family as well (have 3 kids) but I could see how the average could be that high.

That being said, saying that basing the tax from an average number of trips per household is "more direct" seems like an oxymoron to me.

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Our Ever More Belligerent and Stupid Government

By mgilbert on 8/23/2010 3:00:05 PM , Rating: 2

If I had a web log there, I'd shut it down before I'd give those stupid asses the satisfaction. We fought a war to get away from one invasive, out of control government. How long before we need to do it again??? I'm a democrat, but I believe in hanging on to our guns. We might need them again someday to defend ourselves against our government.

RE: Our Ever More Belligerent and Stupid Government

By FaaR on 8/23/2010 3:36:13 PM , Rating: 1

The government always has more guns than you (and bigger guns too).

Only a complete Rtard reasons the way you do. If you think guns are any form of protection against the government you've already failed.

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RE: Our Ever More Belligerent and Stupid Government

By cmdrdredd on 8/23/2010 4:42:16 PM , Rating: 1

quote:
Only a complete Rtard reasons the way you do. If you think guns are any form of protection against the government you've already failed.

You're the idiot. Here's why...

How many citizens own guns? Here's a hint...there's more gun owners who are ordinary citizens than active US military personal. If you think they're going to roll the tanks into SW 7th Terrace in Nowheresville Kansas you're even more stupid than I thought

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RE: Our Ever More Belligerent and Stupid Government

By Bateluer on 8/24/2010 7:59:51 AM , Rating: 2

Also, how many of those service members would 'defect' to the American public? The military definitely has bigger weaponry, but it still needs the people to push the buttons.

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This just in...

By LRonaldHubbs on 8/23/2010 11:58:54 AM , Rating: 5

Small Bloggers Demand Oral Pleasure from Philly Government

is phily gov

By poi2 on 8/23/2010 1:02:27 PM , Rating: 2

is these tax increase have a connection with Democratic or Republicans thing ?

RE: is phily gov

By ssjwes1980 on 8/23/2010 6:33:38 PM , Rating: 2

Stop looking at it that way...
Its a Government thing.
maybe to answer you anyways
"Nutter, as all Philadelphia mayors have been since 1952, is a member of the Democratic Party, which tends to dominate local politics so thoroughly that the Democratic primary for mayor is often more noticeable than the general mayoral election"

I hate when Cities try and use their police and firefighters as tax shields. Every little budget problem that comes up they jump right into your going to be less protected cause you didnt want to give more for the police and your neighborhoods going to burn down cause we had to let some firemen go.

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I read this story on another site already...

By callmeroy on 8/23/2010 3:08:35 PM , Rating: 2

..so I didn't read it on here...

But as someone who's relatives were born and raised in Philly for the past 100+ years and someone who lives in South Jersey and goes through philly often (I work in a suburb of Center City) the city is hurting severely for cash...

They were trying to tax soft drinks earier this year -- if it passed it would almost DOUBLE the price of some beverages...

They then instituted a fee for Philly residents to pay if they wanted their trash picked up ($300 / year).

They have some bizarre plan to do with raising property taxes with the promise that they'll be lowered in x many years or something to that effect.

Mayor Nutter (Mayor of Philly) was talking about reducing the Police force and Fight fighters to save money...I'm not 100% sure that passed yet or not.

But my point....the city's doing ANYTHING to raise money...

Glad I live outside of Philly jurisdiction so my blogs are fine.. :)

RE: I read this story on another site already...

By callmeroy on 8/23/2010 3:12:45 PM , Rating: 2

Oh crap i can't believe I left this out on a post about Philly financial politics...

the DRPA...Delaware River Port Authority that controls the major bridges from Philly to Jersey...yeah...amidst all these budget woes a huge story was just released about how the toll money wasn't really being properly used for bridge maintenance at all...and how some DRPA employees were getting six figure salaries for practically no real work/services performed....yet poor saps like me who pay the tolls every day are paying for this stuff...AND they are talking about raising tolls next year too...

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Interstate Commerce?

By technoboy on 8/23/2010 12:37:32 PM , Rating: 3

Since the blog is available anywhere the net is available, isn't this an illegal tax on interstate commerce?

PS to the bloggers: why not give up the ads and ask for donations instead? I know you're not likely to get much but you'll save the $300 fee.

Love the tagline

By torpor on 8/23/2010 1:28:15 PM , Rating: 2

"Even blogs that fail to make a profit are expected to pay up"?

Seriously?

Nice to see you're new to the whole government/business interaction.

Win or lose, birth or death, the local bigwigs always find a way to get their piece.

To clarify whats happening

By ZachDontScare on 8/23/2010 3:03:05 PM , Rating: 2

From what I'm reading, these bloggers reported their advertising income on their taxes. It looks like Philly just sent out a notice to anyone with self-employment income that did not have a business license on file. I suspect the same sorts of notices went out to people who sell via ebay, or at flea markets, etc.... if they reported self employment income.

This isnt about Philly trying to specificaly repress speech, but rather, its about Philly - one of the most mis-managed, corrupt, and bankrupt cities in the US - to milk their residents out of every penny they can.