Tax Liability

Business, Legal & Accounting Glossary

Definition: Tax Liability



Full Definition of Tax Liability


A tax liability is simply a legal claim on assets or income. Liability is anything owed to another entity, whether that entity is an individual, organization, or government. Therefore, a tax liability is the tax owed by an individual or organization to an authority entity. A tax liability is not paid at the point at which it is created; it becomes a responsibility to be paid in the future. Tax liability is calculated by applying the current tax rate to what is called a taxable event. A taxable event includes the sale of an asset, inheritance and annual income. A tax liability is considered a short-term liability. Failure to satisfy a tax liability could result in legal action such as financial penalties, garnishment of wages, or foreclosure on a particular asset. A tax liability can be satisfied with estimated, periodic tax payments, withholdings from income, or a fiscal year-end payment accompanying tax forms.


Cite Term


To help you cite our definitions in your bibliography, here is the proper citation layout for the three major formatting styles, with all of the relevant information filled in.

Page URL
https://payrollheaven.com/define/tax-liability/
Modern Language Association (MLA):
Tax Liability. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. September 26, 2020 https://payrollheaven.com/define/tax-liability/.
Chicago Manual of Style (CMS):
Tax Liability. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. https://payrollheaven.com/define/tax-liability/ (accessed: September 26, 2020).
American Psychological Association (APA):
Tax Liability. PayrollHeaven.com. Retrieved September 26, 2020, from PayrollHeaven.com website: https://payrollheaven.com/define/tax-liability/

Definition Sources


Definitions for Tax Liability are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 5th February, 2020 | 30 Views.