The Lagos State Internal Revenue Service (LIRS) says it will begin enforcing a legal tool that allows the agency to recover unpaid taxes from defaulting taxpayers through third parties, including banks, employers, tenants, debtors, customers, and business partners.
What LIRS is relying on
In a public notice, LIRS said Section 60 of the Nigeria Tax Administration Act, 2025, empowers the agency with the “power of substitution.”
Under the provision, LIRS can direct any person or organisation holding money for a taxpayer, or owing money to that taxpayer, to remit the funds to the service to settle an established final tax liability.
LIRS said the mechanism applies to taxes it administers, including Personal Income Tax (PIT), Capital Gains Tax (CGT), Stamp Duties and Withholding Tax (WHT).
The agency said that once a substitution notice is served, the recipient is required by law to remit the amount stated, using funds belonging to or payable to the tax defaulter.
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How the recovery will work and penalties
For banks and other financial institutions, LIRS said compliance means remitting the stated amount “without delay,” confirming compliance through its e-tax platform, and providing information on available balances and any encumbrances when requested.
For employers, tenants, agents and other parties who may owe the taxpayer, LIRS said they may be instructed to withhold the specified amount from payments due to the taxpayer and remit it within the timeline stated in the notice.
The agency added that anyone who does not hold or owe money to the taxpayer must notify LIRS in writing within the stipulated period.
LIRS also noted that recipients can file a written objection to an assessment within 30 days of receiving a substitution notice, in line with appeal provisions.
It warned that failure to comply could expose the recipient to liability equal to the specified amount, as well as added penalties and interest, enforcement actions, including distraint, and possible prosecution.
