Lagos, January 25, 2026 –
The Lagos State Government has announced a new crackdown on tax defaulters, giving the Lagos State Internal Revenue Service (LIRS) the authority to recover unpaid taxes directly from bank accounts and through third parties such as employers, tenants, debtors, and business partners.
The move is part of efforts to enforce compliance under the recently enacted Nigeria Tax Administration Act, 2025, specifically Section 60, which grants LIRS the “Power of Substitution.” The public notice, signed by LIRS Executive Chairman Ayodele Subair and dated January 21, 2026, outlines the mechanism for recovering outstanding tax liabilities.
According to LIRS, the law empowers the agency to direct anyone holding money on behalf of a taxpayer—or anyone who owes a taxpayer—to remit funds to the service to settle, either fully or partially, overdue taxes. The measure covers Personal Income Tax (PIT), Capital Gains Tax (CGT), Stamp Duties, and Withholding Tax (WHT).
“Once a substitution notice is issued, the person served is statutorily required to remit the amount specified in the notice from funds belonging to, or payable to, the defaulting taxpayer,” LIRS stated. “Failure to comply constitutes an offence under the Act.”
The notice specifically targets banks and financial institutions, which are required to remit the stated amount without delay and provide confirmation via the LIRS e-Tax platform. Banks may also be asked to report taxpayers’ account balances and any encumbrances.
LIRS warned that defaulters who evade payment may face maximum penalties, prosecution, garnishment of bank accounts, distraint actions, and enforcement of liens. Despite the stringent enforcement, taxpayers retain rights to clarifications, review or objection applications, advance rulings, and dispute resolution under the law.
The agency urged Lagos residents and businesses to review their tax compliance status, regularize outstanding obligations, and engage proactively with LIRS to avoid sanctions.
This initiative signals Lagos State’s determination to strengthen tax compliance and recover billions owed to the government, marking one of the most aggressive tax enforcement campaigns in recent years.
