LIRS to debit employers’ accounts over unpaid taxes

The Lagos State Internal Revenue Service (LIRS) has announced plans to request Nigerian banks to debit the accounts of employers who fail to remit their tax liabilities, citing provisions of the Nigeria Tax Administration Act (NTAA).

The move was disclosed in an official notice issued by the tax authority, in which it clarified that the action is part of the enforcement measures provided under Section 60 of the NTAA and other newly introduced tax laws that came into effect on January 1, 2026.

According to LIRS, the law empowers it to recover outstanding tax liabilities directly from third parties linked to a defaulting taxpayer when such liabilities remain unpaid after they become due.

“Where a taxpayer fails, neglects, or refuses to settle any established outstanding tax liability when due, LIRS may exercise its power under Section 60 to direct any of the following persons to pay the amount owed by the taxpayer,” the notice stated.

The agency listed banks and other financial institutions, employers, tenants, debtors, customers, agents, business partners and any individual or entity holding funds on behalf of a defaulting taxpayer as parties that could be served with what it described as a “substitution notice.”

It further explained that once such a notice is issued, the recipient is legally required to remit the specified amount to LIRS from funds belonging to, or payable to, the taxpayer in default.

“Once a substitution notice is issued, the person served is statutorily required to remit to LIRS the amount specified in the notice from funds belonging to, or payable to, the defaulting taxpayer,” the notice partly read.

READ ALSO: LIRS sets January 31, 2026 deadline for employers’ 2025 annual tax returns

The development signals a more aggressive enforcement posture by the Lagos tax authority, particularly against employers who deduct taxes such as Pay-As-You-Earn (PAYE) from workers’ salaries but fail to remit them to the government.

Meanwhile, the Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, had earlier dismissed claims that the federal government planned to debit personal bank accounts over tax remittances.

Oyedele clarified that the new tax framework is aimed at improving compliance and efficiency in tax administration, rather than arbitrarily targeting individuals’ personal funds.

The LIRS notice comes amid heightened public interest and debate around the implementation of Nigeria’s new tax laws, as authorities at both federal and state levels step up efforts to boost revenue collection and close compliance gaps.