Lagos Tax Authority Can Seize Payments to Recover Unpaid Taxes

The Lagos State Internal Revenue Service (LIRS) has announced that it can recover unpaid taxes from defaulters by directing banks, employers, and other third parties to remit funds on their behalf. This measure is aimed at improving tax collection and ensuring compliance.

LIRS officials explained that this power to seize payments applies only when a taxpayer has a confirmed outstanding tax liability. The agency can reach money owed to a defaulter by requiring others — such as tenants, customers, employers, agents, and financial institutions — to pay funds directly to the government to settle the debt.

The clarification comes under the authority of Section 60 of the Nigeria Tax Administration Act, 2025, known as the “power of substitution.” Once a substitution directive is issued, the recipient must remit the specified amount from funds belonging to or payable to the defaulting taxpayer, with penalties for failure to comply.