The Lagos State Internal Revenue Service (LIRS) has announced efforts to collect unpaid tax bills from noncompliant taxpayers via third parties including as banks, employers, tenants, debtors, and business partners.
The statement was made via a public notice dated January 21, 2026 and posted on the LIRS website. The warning was signed by LIRS’ Executive Chairman, Mr Ayodele Subair.
According to the notice, the Service has the authority 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 transfer such funds to LIRS.
LIRS clarified that this power of replacement extends to unpaid Personal Income Tax, Capital Gains Tax, Stamp Duties, and Withholding Tax managed by the agency.
The notice stated that if a taxpayer fails, neglects, or refuses to settle any established outstanding tax liability, LIRS may use its authority to direct banks, financial institutions, employers, tenants, debtors, customers, agents, and business partners who owe the taxpayer to pay the amounts directly to the Service.
It also stated that once a substitution notice is issued, the person served is legally compelled to pay the amount listed in the notice from funds belonging to or owed to the defaulting taxpayer.
LIRS stated that banks and financial institutions must promptly remit the indicated amount, confirm compliance via the LIRS e-Tax platform, and provide information on the taxpayer’s available balances when requested.
Employers, tenants, agents, and other concerned parties were also asked to withhold the specified sums from funds owed to the taxpayer and remit them to LIRS within the timeframe provided in the notice.
The Service went on to say that anyone who does not own or owe money to the taxpayer must tell LIRS in writing within the specified time frame.
LIRS advised that failing to comply with a substitution directive is an infringement under the Act and may result in penalties, interest, enforcement proceedings such as distraint, and possibly prosecution.
The tax burden will only be considered settled to the extent of the amount paid.
The notice further said that affected parties can object to an assessment in writing within 30 days of receiving a substitute notice, in accordance with the law’s appeal provisions.
While substitution can be used for enforcement operations, LIRS recommended defaulting taxpayers to clear outstanding assessments as soon as possible, emphasising that they are still accountable for any unpaid balance that is not collected.
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