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.

Trading Center