Lagos To Recover Unpaid Taxes Through Banks, Employers, Business Partners — LIRS
The Lagos State Internal Revenue Service (LIRS) has announced plans to enforce its statutory powers to recover unpaid taxes from defaulting taxpayers through banks, employers, tenants, debtors and business partners.
This was disclosed in a public notice dated January 21, 2026, signed by the Executive Chairman of LIRS, Mr Ayodele Subair, and published on the agency’s official website.
According to the notice, LIRS derives its authority from Section 60 of the Nigeria Tax Administration Act, 2025 (NTAA 2025), which empowers tax authorities to recover outstanding tax liabilities through a legal process known as substitution.
Under the provision, any individual or organisation holding funds on behalf of, or owing money to, a taxpayer who has failed to settle a final tax assessment may be directed to remit such funds directly to LIRS.
The agency stated that the substitution power applies to Personal Income Tax (PIT), Capital Gains Tax (CGT), Stamp Duties and Withholding Tax (WHT) administered by LIRS.
“The Nigeria Tax Administration Act, 2025 empowers the Lagos State Internal Revenue Service to direct any person holding money on behalf of, or owing money to, a taxpayer who has failed to pay an established final tax liability when due, to remit such money to the Service,” the notice read.
LIRS clarified that substitution may be triggered where a taxpayer fails, neglects or refuses to pay an established tax liability when due.
It explained that parties that may be served substitution notices include banks and other financial institutions, employers, tenants, customers, agents, debtors and business partners of the defaulting taxpayer.
Once a substitution notice is issued, the affected party is legally required to remit the specified amount to LIRS from funds belonging to, or payable to, the taxpayer.
The Service warned that failure to comply with a substitution directive constitutes an offence under the Act.
Banks and financial institutions served with such notices are required to remit the stated amount without delay, confirm compliance via the LIRS e-Tax platform, and provide information on available balances where requested.
Employers, tenants, agents and other parties were similarly directed to withhold the specified sums and remit them to LIRS within the timeframe stated in the notice.
LIRS noted that any person who does not hold or owe funds to the taxpayer must notify the Service in writing within the stipulated period.
The agency also stated that affected parties may object in writing to an assessment within 30 days of receiving a substitution notice, in line with the appeal provisions of the law.
While substitution may be used as an enforcement tool, LIRS stressed that defaulting taxpayers remain liable for any outstanding balance not recovered, urging taxpayers to settle unpaid assessments promptly to avoid penalties.
The notice warned that non-compliance could result in additional penalties, interest, enforcement actions including distraint, and possible prosecution.