Tax liability is the payment owed by an individual, a business, or other entity to a federal, state, or local tax authority.
In general, a tax liability is incurred when income is earned and when income is generated by the sale of an investment or other asset. A local or state sales tax may be incurred when goods are purchased. (The U.S. does not levy a national sales tax although some countries do.)
It is possible for people to have no income tax liability if their total tax owed was zero or if their income was below the level that would require them to file tax returns.
