Tax liability means the fair amount of taxes that an individual, business entity or organization is compelled to pay to the government. It consist of many kind of taxes such as income tax, property tax, sales tax and excise tax. The liability is even expressed in terms of earnings, transactions or possession. With regard to private entities, a common source of tax obligation is through annual reported income resulting from filed tax returns. For businesses, it comprises profit taxes, employees’ wages tax, and business operating taxes. Paying taxes on time is important so as to avoid penalties, interest or face legal action.
