Under Reporting

Under Reporting

The act of deliberately understating personal income or corporate earnings. One usually underreports in order to pay less in taxes. For example, if one makes $50,000 in a year and reports $35,000, one does not pay taxes on the extra $15,000. Underreporting is illegal because it deprives the government of tax revenue.

Occasionally, underreporting refers to an illegal practice in which a company refrains from reporting earnings in one quarter in order to report them the following quarter. Companies usually do this to drive up the stock price.
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