Tax Liability Definition

Short Definition
The amount of money owed to a local, state or federal tax agency for a taxable event.
Expanded Definition
When a taxable event occurs, money needs to be paid to one or more associated tax agencies. The money due is referred to as a tax liability. The amount of the tax liability varies based upon the type of transaction that has taken place. A taxable event can include the sale of product and earned income. It is a legal obligation to pay tax liabilities to the appropriate agencies.

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