Tax Liability
Amounts owed to government authorities for various taxes, including income, sales, property, and payroll taxes, requiring proper accrual and payment planning.
Tax Liability
The amount of taxes owed to government authorities, which may include income taxes, sales taxes, property taxes, and payroll taxes.
For example, a profitable retail business might have tax liabilities including $50,000 in federal income tax, $15,000 in state income tax, $30,000 in collected but unremitted sales tax, and $25,000 in payroll taxes.
Tax liabilities require careful management to ensure compliance with filing deadlines and payment requirements while minimizing penalties and interest. Current tax liabilities appear in the current liabilities section of the balance sheet, while deferred tax liabilities typically appear as non-current liabilities, representing future tax consequences of temporary differences.