According to a Philadelphia newspaper:
For the past three years, Marilyn Bess has operated MS Philly Organic, a small, low-traffic blog that features occasional posts about green living, out of her Manayunk home. Between her blog and infrequent contributions to ehow.com, over the last few years she says she's made about $50. To Bess, her website is a hobby. To the city of Philadelphia, it's a potential moneymaker, and the city wants its cut.
In May, the city sent Bess a letter demanding that she pay $300, the price of a business privilege license.
So she earned $50 and has to pay out $300? Like most people, she didn't think placing ads on her blog classified her blog as a "business". Of course, the city only knows about the ads you're placing on your blog if you report that income on your taxes. So it's the honest bloggers who are being screwed. I'm not advocating being a tax cheat, but if ever there was a reason to not report taxes, this would be it. Maybe she'll join the Taxed Enough Already (TEA) Party?
Another blogger, Sean Barry on his blog Circle of Fits, hosted on the free Blogspot earned just $11 in profit over two years and also received a letter from the city.
Barry wrote on his blog Friday
Circle of Fits is a labor of love for the most part. I re-launched it in Sept. 2008 as therapy...as a project that could allow me to reconnect to a long dormant creative writing/ side of my life trapped under years of doubt, loss and laziness...and inspired into fruition by the snapshots of the last year of my late sister's life.I for one have never heard of a "license" to blog.
I never expected Circle of Fits to "make money" or be deemed a "business"... I put ads on it as an experiment, and I don't ever expect anyone to click on them..I don't even know how to put the time in to learn how to control which ones are being presented.
Fine, if they want to play it that way and consider hobbyist blogging in the basement as a "business", then two can play that game. Since you are a "business", you can now safely deduct your Internet costs (~$400/year) and computer on your federal income tax return. You can also deduct your home office and a percentage of your electricity, mortgage, heating, etc. Also, you can deduct losses for 5 years, which should more than offset the $300. Of course, these deductions really only work if you don't take the standard deduction on your federal income tax. And if the IRS agent comes knocking, just say "Hey, my stupid city says I'm running a business. Take it up with them."