LIRS Targets Banks, Employers to Recover Unpaid Taxes Under New Enforcement Powers

The Lagos State Internal Revenue Service (LIRS) has announced plans to intensify efforts to recover unpaid taxes by enforcing its statutory powers against defaulting taxpayers through third parties, including banks, employers, tenants, and business partners.

The move was disclosed in a public notice dated January 21, 2026, and published on the LIRS website. Signed by the Executive Chairman, Mr Ayodele Subair, the notice cited Section 60 of the Nigeria Tax Administration Act (NTAA) 2025, which empowers tax authorities to recover outstanding tax liabilities through a mechanism known as “substitution.”

Under this provision, LIRS can direct any individual or institution holding funds on behalf of, or owing money to, a defaulting taxpayer to remit such funds directly to the Service. The enforcement applies to several taxes administered by LIRS, including Personal Income Tax, Capital Gains Tax, Stamp Duties, and Withholding Tax.

According to the notice, banks, financial institutions, employers, tenants, debtors, customers, agents, and business partners may be compelled to pay amounts due to a taxpayer who has failed to settle an established and final tax liability. Once a substitution notice is issued, the recipient is legally required to comply by remitting the specified amount to LIRS within the stated timeframe.

LIRS warned that failure to comply with substitution directives constitutes an offence under the law and could attract penalties, interest, enforcement actions such as distraint, and possible prosecution. While funds recovered through substitution reduce the taxpayer’s liability, the Service noted that defaulting taxpayers remain responsible for any unpaid balance and urged them to settle outstanding assessments promptly to avoid further sanctions.

source: punch