Is it a lie to not report income in taxes? Facing a situation where if I report cash income, a lot of people would get in trouble. Would it be a lie to report income as zero when filing taxes?

Is abstaining from declaring income on paper a lie?

Thank you
As a lay practitioner you should make the fivefold offering (pañca,balī) out of which offering to the king [the government] (rāja,balī) which is akin to tax filing in the modern day. [Adiya Sutta, Patta Kamma Sutta]

Since taxes are legally owned by the government and not paying them would be misappropriating something belonging to the government which is similar to stealing. If you add false information in your tax return to get away with taxes then it is both lying and stealing. Also withholding information with the intent to mislead is also like lying. 

Having said this by all means use tax planning / tax avoidance (legal) but not tax evasion (illegal). If what you are doing is illegal and there are sums owed to the tax authorities then it is stealing as iterated above.