The second meaning is a bit like "you are pushing your luck" or being unreasonable, usually at someone else's expense.

Taking the piss can mean going too far with some form of poor behaviour, usually at work, eg taking a two hour lunch hour might be taking the piss, or sparking up a joint during a ciggie break.

But it can also be in a social, non-work content: "It's fair enough to ask for petrol money, but Bob was taking the piss when he asked for a quid a mile, the cheeky cunt."