Searching for Some Cold Hard Facts About the Blogger Tax

How would a "blogger tax" affect you? If this "blogger tax" is indeed real and going to be enforced, there are many people who will have to stop writing. Would it affect me to be taxed on the money I make here at Associated Content from Yahoo!? Of course it would. It wouldn't really make any sense for me to write, if the fees really were what is being shouted basically from the rooftops. Would it make sense to tax someone $300.00 plus who makes less than $50.00 from their blog? No it would not, that's why I'm writing this article. I will try to sift through the rumor mill and make more sense of this story.

Some of the More Sensational Headlines

The reason it is so hard for me to get down to the cold hard facts is because the internet is literally being overwhelmed right now with sensational headlines and stories of poor little old ladies and college kids trying to pay for school books with blog money, who will now be taxed even if they make a mere $11.00. Now let us take a deep breath and think about this. First of all, as I said, the business license and taxes are two separate issues. If someone has their blog set up as a business, then yes, no matter how much they make, they will be expected to pay into social security taxes, medicare taxes and any other taxes typically incurred while running a business. How many people out there are going to set up their blog as a business? I can't say that for sure, but I can't imagine many.

This is Actually an Issue Blown Out of Proportion

OK, now that you've had a moment to digest what's been going around the blogs as one of he hottest political issue in Philadelphia today, I can tell you as most rumors do, it has a little bit of truth. As for the $300.00, that is for a license with no expiration. It is actually not a tax, rather a $50.00 fee for a Business Privilege License. The taxes are an entirely separate issue, but one that everyone should be aware of. Robert Moran at Philadelphia Daily News quoted Mayor Nutter's spokesman Doug Oliver as saying: "There's often a blurry line when someone's passion becomes their profession," and "...A blog is not a business unless it starts selling ads or otherwise generating revenue...". I imagine this got a lot of people thinking as many now use Ad sense and there are many freelance writing sites, such as our very own Associated Content from Yahoo!.

Jumping The Gun

There is a certain amount of income that needs to be generated before it is taxed. If someone is writing on say Word press, and they generate $50.00 they will not be taxed. Now the $50.00 Business Privilege License is a different story. If someone is writing for a full time income, yes, they should expect to be to be taxed just like any other job. However, if the person did their research before embarking on such a business venture, they shouldn't be surprised that yes, they will indeed be taxed on that income. You can view Associated Content's FAQ's about taxes here. It clearly states if you make $600.00 or more in a year, you will be issued a 1099. Similar sites such as Helium and The Examiner has the same information as well.

My Phone Call To The IRS

Since I didn't want to skim my information from headlines and rumors which would only add fuel to the fire, I went straight to the place where I would get unbiased information-the IRS. When I called the IRS, it wasn't just for this story, I really do want to make sure I do things on the up and up, the right way. I was getting caught up in he sensationalism as well and became a bit confused. So I called the IRS at 1-800-829-1040 and spoke to a very informative woman who identified herself as merely a number. She explained to me that yes, I am required to report all income, no matter how small. That what was stated in Associated Content and many other FAQ's is merely a guideline as to when they have to send out a 1099. The IRS worker then informed me that although I must report every penny earned, it would not be considered taxable until it reaches $400.00 for a year. Once I reach $400.00 a year, as any other self employed person or business owner, I would be required to pay 15.43% of my net earnings. This would go towards the social security tax, medicaid, etc.

What Exactly is the $50.00 Annual Business Privilege License (or $300.00 lifetime) And Who Will Be Affected?

According to the business section of the Philadelphia government website:* "A Business Privilege License is required for all businesses operating in Philadelphia. This includes businesses that are located outside the city limits but do some or all of their business activities in the City. Also, if you receive payment for work and an employer does not pay wage taxes on your behalf for that work, you are considered a Sole Proprietor and treated as a business by the City of Philadelphia. You are required to apply for a Business Privilege License to work as a Sole Proprietor in the City."

So here's the million dollar question: Who will be targeted to pay this Business Privilege License when it comes to blogging or writing online? I can't speak with total authority, but it seems impossible to do so unless they targeted every single blog and media content writer. I say this because even living outside city limits, if someone in the city reads your blog, and you are utilizing Ad sense or another revenue generator, then it falls under the above statement: "This includes businesses that are located outside the city limits but do some or all of their business activities in the City." I write my small articles on my computer at home, outside of Philadelphia. People who live in Philadelphia do from time to time read them. So if enforced, yes this would effect me.

The Basics of This Concept

In the end, basically this law has always been in effect. The only difference is, no one ever mentioned blogs or media content before. In order to enforce this to all writers online, it would take an outrageous amount of time and manpower which Philadelphia does not have. As for the fees, the blown up $300.00 "blogger tax" and being taxed on making $50.00 in two years, or as one blogger said, $11.00 is just that. Blown up whisper down the lane rumors. If they choose to enforce it, there would be a $50.00 Business Privilege License fee, or $300.00 for a lifetime, whichever you would choose. As for the taxes, you must report all earnings, but you are not required to pay taxes on your writing income if it is less than $400.00 in a year.

For Business Privilege License Information -
Department of Licenses and Inspections
License Issuance Unit - PSC
1401 John F. Kennedy Boulevard
Concourse Level
Philadelphia, PA 19102
Phone: 311
Hours: Monday - Friday, 8:00am- 3:30pm (except for the last Wednesday of each month when the hours are 8:00am- 12:00 Noon)

http://www.philly.com/philly/news/20100824_Is_Philly_taxing_bloggers_.html
http://business.phila.gov/Pages/Home.aspx
http://www.irs.gov/
http://www.associatedcontent.com/faq.html#B13
*http://business.phila.gov/Pages/BusinessPrivilegeLicense.aspx?stage=Start&type=All%20Business%20Types§ion=City%20Registration&BSPContentListItem=Obtain%20a%20Business%20Privilege%20License