Tax Liability

Tax liability is the total amount of tax debt owed by an individual, corporation, or other entity to a taxing authority like the Internal Revenue Service (IRS). In other words, it is the total amount of tax you’re responsible for paying to the taxman. Tax liabilities are incurred when income is earned, there is a gain on the sale of an asset, or another taxable event occurs. No tax liability means a taxpayer’s total tax was zero in the prior year, or they did not have to file a tax return. 1 In 2020 because of the COVID-19 outbreak, both tax filing and tax payment deadlines for 2019 taxes were extended to July 15, 2020, from April 15.