Azure tags in FlexReports are coming from Azure bills and those bills are collected using the Azure Cost Management API for EA and MCA account types. For a tagged asset to show in FlexReports it needs to have incurred costs and have a line item in the bill.
You can find more information regarding this here: Different APIs are used to collect Azure tags
If the Virtual Machine Asset report https://apps.cloudhealthtech.com/assets/azure/vms shows the VM's Power State in question as "Deallocated", meaning it is powered off, it does not incur a charge in this state. This results in the asset not showing in the bill and therefore won't show in FlexReports. Other resources, such as disks, network etc. will continue to incur charges if the VM is still active and these resources are still attached to VM and line items will appear for meter categories Storage and Virtual Network.
Please refer to the Microsoft official documentation below. The following table provides a description of each instance state and indicates whether that state is billed for instance usage.
https://learn.microsoft.com/en-us/azure/virtual-machines/states-billing#power-states-and-billing