by Lynette Alice

Created on: August 27, 2010   Last Updated: May 01, 2011

Recently, the “Philadelphia Blogger tax” has become an issue of great interest to many people around the country, not just those living in Philadelphia. In part the attention is due to a number of misconceptions about just what this is, and how it impacts individuals. As it has been referenced as a possible solution to add to the coffers of cash strapped cities around the U.S. to enforce as well, it is good to know what is fact and fiction about the Philadelphia blogger tax so that if and when it is mentioned in your neck of the woods, you know what the reality of it is.

The Philadelphia blogger tax is not anything new. In reality, it is the same tax that has been around for freelancers for years and years whether the freelancing is online or in person. The blogger tax is actually just a name that got hung on the project to spearhead the collection of revenue that people are making online whether it be via a blog, Amazon or other affiliate program, or any means of revenue generation.

It basically means that if you are living in Philadelphia and making money online - and yes that does include revenue from Google Adsense - you are responsible to have a business license and pay any taxes that are due. What was realized is that many people working online have dodged taxes for years either knowingly, or because they did not realize for some reason that any income needs to be reported. In theory, this would even apply to a kid sweeping the sidewalk at a storefront for a dollar, or running a lemonade stand.

A part of the problem that created confusion is that most sites provide no guidance on tax issues. For the most part, you get a 1099 if you hit the $600 annual revenue marker and are on your own after that. In many regards the sites themselves are designed to stick it to the individual selling a good or service. Take Amazon for instance, when you sell something via Amazon neither they nor the person making the purchase pays sales tax on it - that falls wholly on you, and that is what most people do not realize that creates a problem.

The complaint has been that there are bloggers who have made very little revenue and never filed for a business license that wound up in a position in which they paid out more money than they made. For some casual or less than skilled bloggers that made on $25 or $30 for instance from their blogs and never thought it worth reporting or were unaware of the law, the realization was a harsh slap. A lifetime business license for freelancers - which is what bloggers are considered - is $300. A one year license is $50. In some cases, believe it or not, people that laughed it off wound up paying over $100 in penalties and registration fess, were reported to collection agencies, and could even have a lien placed against them - all for a what amounts to a pair of pants.

The bottom line on the Philadelphia bloggers tax is that if you freelance in any way that makes you money, you need to register for a business license and report your income. It is the same as if you had an actual storefront you worked from. This is just a means of keeping up with changing times in order to ensure the city is collecting all the revenue it is due. It has nothing to do with bloggers specifically, it was just the tag that was hung on the campaign for change by someone, and after that the web went wild with it.

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