Letters to the Editor

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Published: Sep 1, 2010

CONFUSION

The reason [Marilyn Bess] or any individual who received a letter [from the city saying that he or she needed to pay a business privilege tax on the blog he or she operated] was because on her federal income taxes she claimed these earnings not as a hobby but as a business [Naked City, "Pay Up," Valerie Rubinsky, Aug. 12, 2010]. Therefore, for federal income taxes, an individual who claims these earnings as a business can receive deductions for their computer or web hosting as a business expense. However, these have implications for one's local taxes. That point is not stressed [in the story]. These individuals claimed their blogs as businesses. There are consequences — such as receiving tax deductions as well as paying additional taxes — for making that claim.

Everyone needs to pay their taxes, and it is important for Philadelphia residents to understand when their hobbies become businesses. If you generate revenue ($1 or $1 billion) then you are a business and need to file (whether you take a loss or make a profit doesn't matter in determining if you file, just the fact that you had revenue). If whatever you are doing does not bring in any money, you are not in business.

[Referring to the line from the story that says, "So even if your blog collects a handful of hits a day, as long as there's the potential for it to be lucrative ... the city thinks you should cut it a check"]: The "potential to be lucrative" phrase is misleading. If I own a blog that has the potential to include ads, but I don't have any, I am not required to register for a business license or the business privilege tax. I believe a lot of the misunderstanding is because individuals blogging without ads on their sites believe they must pay a tax on it.

[Editor's note: The online version of this story has been changed to reflect new information and to incorporate clarifications.]

A quote in last week's cover story ["Market Panic," A.D. Amorosi] implied that increased L&I enforcement in commercial corridors was a result of the city's fiscal deficit. Maura Kennedy, the quoted city spokesperson, denies that this is the case. The original quote was mischaracterized; City Paper regrets the error.

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