Tax liabilities are nothing but, the amount of money we owe to the taxing authorities in taxable events. As it is also an obligation, the tax liability is also called a tax obligation. Tax is being imposed upon individuals, organizations, and corporations, to fund administrative roles and social functions by some tax authorities like local, state or national government. The taxes at taxable events are legally binding, and taxable events include earning income, selling stuff, issuing or receiving a payroll, etc. The calculation formula for tax liability is multiplying the tax rate and the taxable event. They are liabilities because there are various legal options for the tax authority to enforce these taxes or payments. Taxation is important because of the financial dependability of tax authorities on taxes. For example, the taxes, we pay, are important to the government or ruling systems, which end up being funds for public services. If any entity failed to pay their tax obligations, then, they can be fined, can liquidate assets or can even be jailed, which is the reason for many entities to attempt their best to minimize their liability each year by using tax credits, donations, tax shelters. Some countries, which enforce low tax to no tax liabilities, are like heaven for every taxpayer and the fun fact is, they are called tax havens.