A state Supreme Court decision in Virginia has ruled that cities cannot tax people who work in their own homes as "businesses."
The case was handled by the Institute for Justice, which challenged an agenda by Charlottesville, Virginia, to impose a "business license tax" on freelance writers whose work involves them sitting in front of a computer at home.
The decision affirmed a lower court ruling that said the same.
And as a result, freelancer Corban Addison will get a refund of $2,461.23 in taxes he did not need to pay.
"Today’s decision affirms that municipalities don’t have an unlimited power to tax. If a city wants to tax its citizens, the law must be clear," said IJ Attorney Renée Flaherty. “Writers aren’t running businesses, and Charlottesville can’t tax them like they are."
Charlottesville since 2018 has been claiming that freelance authors like Corban must pay the city's business license tax – even though the "city’s business code does not list authors among the list of taxable occupations," the IJ reported.
"If a municipality wants to tax its citizens, it must be clear about who it is taxing. A government cannot simply pass vague tax policies and then treat citizens like living, breathing ATMs," said IJ Attorney Keith Neely.
The IJ explained the point of a business license tax is to help the city pay for infrastructure linked to storefronts.
But that does not apply to Corban or other freelancers, whose "business" operations involve no parking, showroom or visitors.
The city claimed while authors are not specifically listed, the law’s “catchall provision” required Corban to pay the business license tax.
"Taxing freelance writers under an ambiguous catch-all provision in the city code was unfair,” Corban said. “Today’s decision is an affirmation of what I always believed: Charlottesville is a place that is open and welcoming to creative individuals.”
The lawsuit was launched in 2019 after Corban was assessed thousands of dollars in back taxes.
His suit was filed in conjunction with fellow best-selling author John Hart, who is challenging Albemarle County’s similar law. In January 2021, the 16th Judicial Circuit of Virginia held that Charlottesville’s business license tax violated Corban’s 14th Amendment rights.
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