The Lagos State Internal Revenue Service has revealed that under the new tax law, state revenue authorities can recover unpaid taxes by accessing funds held in the bank accounts of employers, friends, tenants, business partners and other third parties linked to a tax defaulter. LIRS explained that the Nigeria Tax Administration Act (NTAA) 2025 empowers the agency to deduct outstanding tax liabilities from rent payments and from accounts belonging to family members, associates or partners who are holding funds on behalf of a defaulting taxpayer.
The service noted that the law allows for direct recovery once a taxpayer fails to remit an assessed tax when due, extending enforcement measures beyond the individual’s personal accounts to those of persons or entities financially connected to them. According to LIRS, Section 60 of the NTAA 2025 authorises the issuance of substitution notices to banks, employers, tenants and any individual or organisation that holds or owes money to a tax defaulter, instructing them to remit such funds to settle the outstanding tax.
In a statement, the service said that where a taxpayer neglects or refuses to pay an established tax liability, it may direct banks and other financial institutions, employers, tenants, debtors, customers, agents, business partners or any person holding or owing money to the taxpayer to pay the amount due, whether the funds are immediately payable or accruing. LIRS added that in such situations, substitution notices would be served on the defaulter’s bank or on third parties holding funds on the taxpayer’s behalf.
Under the law, financial institutions are required to disclose the account balances of the defaulter and any associated third parties and remit the outstanding tax amounts to LIRS without delay. Confirmation of payment is subsequently issued through the LIRS e-Tax platform at [www.stax.lirs.net](http://www.stax.lirs.net).
The agency cautioned that non-compliance with a substitution notice now constitutes an offence, warning that friends, business associates and other connected parties may be held financially liable if found to be in possession of funds belonging to a tax defaulter. The NTAA 2025, which took effect on January 1, has stirred controversy among some lawmakers, who accused the administration of President Bola Tinubu of introducing changes not reflected in the officially gazetted version of the law.
Source: https://gazettengr.com/
