Jack is a law-abiding US citizen who was filing his first taxes at age 21. He put his information into a free online e-filer and got the shock of his life. Jack only had \$3000 in income - but the return said that he owed \$2800 in taxes! How was this possible?
closed as too broad by Deusovi♦, JGreenwell, Spencerkatty, f'', Mike Earnest Mar 4 '16 at 3:13
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The first answer that comes to my mind is that Jack is a storekeeper who owes sales taxes. Even though his net income after deductions is only \$3,000, his gross sales could be around \$40,000, which had \$2,800 (7%) of unremitted sales taxes collected on it, and out of which \$37,000 was deducted as cost of goods sold and other business expenses.