A municipality charges 12 mills in taxes. The assessed valuation of a piece of real estate in the municipality is $225,000, but its fair market value is $250,000. The property has an annual tax obligation of $2700.
<h3>What is meant by tax liability?</h3>The sum of money owed to the Internal Revenue Service (IRS) at the conclusion of each tax year is referred to as "tax liability." By pursuing deductions and adjusting their filing approach, many Americans set the objective of lowering their tax obligation.
Tax liability is the total amount of tax that people and companies owe to the federal, state, and local governments in a specific time frame. Tax liabilities are short-term obligations for firms that are listed on a balance sheet and paid off within a year.
One mill = 0.001
12 mills = 0.012
Taxes are based on assessed valuation, not fair market value.
0.012 $225,000 = $2,700.
Another way to think about it is that 1 mill = $1 of tax for each $1,000 of assessed value.
A municipality charges 12 mills in taxes. The assessed valuation of a piece of real estate in the municipality is $225,000, but its fair market value is $250,000. The property has an annual tax obligation of $2700.
The complete question is:
A municipality has a tax rate of 12 mills. A piece of real property in the municipality is assessed at $225,000 and has a fair market value of $250,000. The annual tax liability on the property is:
A. $120
B. $300
C. $2,700
D. $3,000
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