The Lagos State Government has announced plans to enforce its statutory powers to recover unpaid taxes directly from banks, employers, tenants and other third parties linked to defaulting taxpayers. The move follows a public notice issued by the Lagos State Internal Revenue Service (LIRS), referencing Section 60 of the Nigeria Tax Administration Act (NTAA) 2025, which empowers the agency to apply the “Power of Substitution” to recover established and final tax liabilities.
In the notice, LIRS informed employers, financial institutions, business operators and tax agents that it is legally authorised to direct any person or organisation holding funds on behalf of a taxpayer, or owing money to a taxpayer, to remit such funds directly to the Service. The provision applies where a taxpayer fails, neglects or refuses to pay assessed taxes when due, and covers liabilities including Personal Income Tax, Capital Gains Tax, Stamp Duties and Withholding Tax.
Under the Act, substitution notices may be served on banks, employers, tenants, debtors or customers of a defaulting taxpayer, requiring them to remit the specified sums to LIRS from funds belonging to the taxpayer. The agency said any amount remitted will be deemed to have settled the tax liability to that extent, warning that failure to comply with a substitution notice constitutes an offence under the law.