The Lagos State Internal Revenue Service (LIRS) has announced plans to recover outstanding tax liabilities from defaulting taxpayers by engaging third parties, including banks, employers, tenants, debtors and business partners.
In a public notice dated January 21, 2026, and published on its website, the Service said the move is in line with Section 60 of the Nigeria Tax Administration Act (NTAA) 2025. The notice was signed by the Executive Chairman of LIRS, Ayodele Subair.
According to LIRS, the law authorises tax authorities to direct any person or organisation holding funds on behalf of a taxpayer, or owing money to one, to remit such funds directly to the Service where there is a confirmed and unpaid tax liability.
The substitution power applies to taxes administered by LIRS, including Personal Income Tax, Capital Gains Tax, Stamp Duties and Withholding Tax.
LIRS explained that where a taxpayer fails to settle an established liability when due, it may issue substitution notices to banks and financial institutions, employers, tenants, customers, agents, debtors and business partners, directing them to pay amounts due to the taxpayer directly to the Service.
Once served with a substitution notice, the recipient is legally required to remit the specified amount from funds belonging to or payable to the defaulting taxpayer. Failure to comply constitutes an offence under the Act.
The Service added that banks and financial institutions must remit the stated sums without delay, confirm compliance via the LIRS e-Tax platform, and provide account balance information where requested. Employers, tenants, agents and other affected parties are also required to deduct and remit the specified amounts within the timeframe stated in the notice.
LIRS clarified that individuals or organisations that do not hold or owe funds to the taxpayer must notify the Service in writing within the stipulated period.
Affected taxpayers were reminded of their right to object to an assessment within 30 days of receiving a substitution notice, in accordance with the law.
While describing substitution as a lawful recovery mechanism, LIRS warned that defaulting taxpayers would remain liable for any outstanding balance not recovered. The Service advised taxpayers to settle unpaid taxes promptly to avoid penalties, interest, enforcement actions and possible prosecution.