Lagos to recover unpaid taxes through banks, employers, business partner – LIRS
The Lagos State Internal Revenue Service has announced plans to recover outstanding tax liabilities from defaulting taxpayers through third parties such as banks, employers, tenants, debtors and business partners.
The announcement was contained in a public notice dated January 21, 2026, and published on the LIRS website. The notice was signed by the Executive Chairman of LIRS, Mr Ayodele Subair.
According to the notice, the Service is empowered under Section 60 of the Nigeria Tax Administration Act, 2025, 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 funds to LIRS.
LIRS explained that this power of substitution applies to unpaid Personal Income Tax, Capital Gains Tax, Stamp Duties and Withholding Tax administered by the agency.
The notice stated that where a taxpayer fails, neglects or refuses to settle any established outstanding tax liability, LIRS may exercise its power to direct banks, financial institutions, employers, tenants, debtors, customers, agents and business partners who owe the taxpayer to pay such amounts directly to the Service.
It added that once a substitution notice is issued, the person served is legally required to remit the amount specified in the notice from funds belonging to, or payable to, the defaulting taxpayer.
LIRS noted that banks and financial institutions must remit the stated amount without delay, confirm compliance through the LIRS e-Tax platform and provide information on the taxpayer’s available balances when requested.
Employers, tenants, agents and other affected parties were also directed to withhold the specified sums from funds due to the taxpayer and remit same to LIRS within the period stated in the notice.
The Service further explained that any person who does not hold or owe money to the taxpayer is required to notify LIRS in writing within the stipulated period.
LIRS warned that failure to comply with a substitution directive constitutes an offence under the Act and may attract penalties, interest, enforcement actions including distraint and possible prosecution.
The tax liability will only be considered settled to the extent of the amount remitted.
The notice also stated that affected parties may object in writing to an assessment within 30 days of receiving a substitution notice in line with appeal provisions under the law.
While enforcement actions may be taken through substitution, LIRS advised defaulting taxpayers to settle outstanding assessments promptly, noting that they remain liable for any unpaid balance not recovered.
