Tax Cheat

DEFINITION of 'Tax Cheat'

An individual (or group) who, through fraud, dishonesty or avoidance, does not pay the amount of tax that would be obligated if tax rules were properly followed. A tax cheat may improperly use tax shelters or purposefully miscategorize earnings and expenses under the pretense that the government will not miss the lost revenue because of the obligation's size relative to all taxes collected. Those found to be cheating on their taxes may be subject to fines, penalties or imprisonment.

BREAKING DOWN 'Tax Cheat'

The Internal Revenue Service (IRS) allows taxpayers to report individuals and organizations that they suspect are tax cheats. As an incentive, it provides a potential reward if it is found that those being reported did, in fact, underpay taxes.

RELATED TERMS
  1. Tax Fraud

    Tax fraud occurs when an individual or business entity willfully ...
  2. Tax Base

    The assessed value of a set of assets, investments or income ...
  3. Net Of Tax

    An accounting figure that has been adjusted for the effects of ...
  4. Taxes

    An involuntary fee levied on corporations or individuals that ...
  5. Tax Rate

    The percentage at which an individual or corporation is taxed. ...
  6. IRS Publication 514

    A document published by the Internal Revenue Service that provides ...
Related Articles
  1. Personal Finance

    How To Report A Tax Cheat

    If you report a tax evader to the IRS, you could be eligible for a reward.
  2. Personal Finance

    How The IRS Catches Tax Cheats & Liars

    When civil and criminal penalties don't deter people from skipping out on their taxes, the IRS has other tools it can use.
  3. Personal Finance

    Tax Haven Vs. Tax Shelters: Is There a Difference?

    Learn about the difference between tax havens and tax shelters, and how both are used to reduce tax liability or avoid paying taxes altogether.
  4. Personal Finance

    Do Tax Cuts Stimulate The Economy?

    Learn the logic behind the belief that reducing government income benefits everyone.
  5. Personal Finance

    America's Missing $15 Billion in Corporate Taxes

    The “Starve the IRS” strategy cuts the supply of corporate auditors. Result: Big-money tax cheats go free and ordinary taxpayers pay every penny they owe.
  6. Personal Finance

    Use Tax Vs. Internet Sales Tax: How Are They Different?

    Learn about the differences between a use tax and an Internet sales tax. Find out about transactions in which the taxes apply, and to whom they apply.
  7. Personal Finance

    3 Federal Income Tax Facts You Didn't Know

    Learn about three federal income tax facts that most Americans may not know from one of the most trusted financial resources on the Web.
  8. Personal Finance

    The History Of Taxes In The U.S.

    The number of taxes that we now consider a given did not always exist. Find out how they arose.
  9. Investing

    Calculating Net of Tax

    Net of tax is a figure that has been adjusted for taxes.
  10. Personal Finance

    Could The Fair Tax Movement Ever Replace The IRS?

    Although many taxpayers would love to see the IRS abolished, only a handful of thinkers have come up with any sort of viable replacement plan. The Fair Tax is one such idea that has continued ...
RELATED FAQS
  1. What are the differences between regressive, proportional and progressive taxes?

    Understand the differences between the most common tax systems including regressive taxes, proportional taxes and progressive ... Read Answer >>
  2. How does the effective tax rate for an individual differ from that of a corporation?

    Read about the effective tax rate for individuals when compared with the effective tax rate for corporations, including how ... Read Answer >>
  3. How does the marginal tax rate system work?

    The marginal tax rate is the rate of tax that income earners incur on each additional dollar of income. As the marginal tax ... Read Answer >>
  4. Is progressive tax the same thing as marginal tax rate?

    Learn how a marginal tax rate is a form of a progressive tax rate. Learn the pros and cons of such a tax policy and who may ... Read Answer >>
  5. What is the difference between a regressive tax versus a progressive tax?

    Determine how progressive and regressive taxes impact your personal finances, and learn more about how you pay both types ... Read Answer >>
  6. Who first came up with the idea of a progressive tax?

    Learn how the progressive income tax system developed in the United States and became the federal government's primary revenue ... Read Answer >>
Hot Definitions
  1. Quantitative Trading

    Trading strategies based on quantitative analysis which rely on mathematical computations and number crunching to identify ...
  2. Bond Ladder

    A portfolio of fixed-income securities in which each security has a significantly different maturity date. The purpose of ...
  3. Duration

    A measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates. ...
  4. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
  5. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
  6. Front Running

    The unethical practice of a broker trading an equity based on information from the analyst department before his or her clients ...
Trading Center