Taxable Talk

I don’t think highly of California’s business climate. Still, things could be worse: I could be in Philadelphia. The City of Brotherly Love has sunk to a new low.

After going after penny-ante bloggers the city’s Revenue Department has been tasked with administering a new Tobacco Tax. All businesses with a business tax account were sent a form that must be completed by September 30th, or they’ll have a new Tobacco Tax Form filing requirement…and there’s a $5,000 penalty for not filing the form.

I have a couple of clients in Philadelphia (neither sell anything). I’ll be letting them know that they must complete this useless form and return it. It is, as noted by Kelly at Taxgirl.com, a waste of time and money.

Another reason that, on the whole, I’d rather not be in Philadelphia.

Suppose you are a blogger that accepts advertising, and you reside in Philadelphia. You make $10 a year from the small blog advertisements you accept. It’s not much, but it’s something…until you get the bill from the City of Philadelphia for $300.

Philadelphia has a Business Privilege Tax that requires a license. A lifetime license costs $300; you can also buy a license for $50 a year. You will then also have to file the BPT returns each year and pay any tax owed. For the small-time blogger, it probably makes sense to avoid selling advertising as your $10 of profit just became at minimum a $40 loss.

Is Philadelphia within its rights to require a blogger who sells advertising to obtain a business license? Certainly. Overall, does it make sense? Well, that should be obvious.

Of course, Philadelphia is taking this one step further. The City of Brotherly Love requires a BPT license for, “any business…engaged in a for-profit activity in the City of Philadelphia.” So if you are a blogger in Philadelphia and set aside space for advertising on your blog but don’t sell ads, in the view of Philadelphia you need a BPT license. It’s not clear if Philadelphia is enforcing that part of their BPT yet, but they could.

There’s a solution, of course: move. If the City of Philadelphia has a bad tax structure, consider a nearby suburb. Unlike W.C. Fields, you may be far better off not being in Philadelphia.