By Charles Maduka
The Lagos State Internal Revenue Service has announced plans to recover unpaid taxes from defaulting taxpayers through third parties such as banks, employers, tenants, debtors and business partners.
This was disclosed in a public notice dated January 21, 2026, which was seen on the official website of the tax agency.
According to the notice signed by the Executive Chairman of LIRS, Ayodele Subair, the agency has the legal power under Section 60 of the Nigeria Tax Administration Act, 2025, to instruct anyone holding money for a taxpayer, or owing money to a taxpayer, to remit such funds if the taxpayer has failed to pay a confirmed tax liability.
LIRS explained that this power applies to unpaid Personal Income Tax, Capital Gains Tax, Stamp Duties and Withholding Tax under its administration.
The agency stated that where a taxpayer refuses or fails to settle an outstanding tax liability when due, LIRS may direct banks, financial institutions, employers, tenants, customers, agents, business partners or any person owing the taxpayer to pay the money directly to the service.
The notice further explained that once a substitution notice is issued, the affected third party is required by law to remit the stated amount to LIRS from funds belonging to the defaulting taxpayer.
LIRS warned that failure to comply with a substitution notice is an offence under the law, noting that the tax liability is considered settled only to the extent of the amount paid.
The agency added that banks and financial institutions must remit the specified amount without delay, confirm compliance through the LIRS e-Tax platform and provide information on available balances when requested.
Employers, tenants, agents and other affected parties were also directed to withhold the stated sums from payments due to the taxpayer and remit them to LIRS within the period stated in the notice.
LIRS noted that any person who does not hold or owe money to the taxpayer must inform the service in writing within the stated time.
The notice also stated that affected parties have the right to object in writing within 30 days of receiving a substitution notice, in line with the appeal provisions of the law.
While substitution may be used to recover unpaid taxes, LIRS said defaulting taxpayers remain responsible for any balance not recovered and advised them to settle outstanding tax assessments promptly to avoid penalties.
The agency warned that failure to comply with substitution directives could lead to additional penalties, interest, enforcement actions and possible prosecution.
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