The Lagos State Internal Revenue Services (“LIRS”) has issued a public notice to inform the general public of the provisions of the Nigeria Tax Administration Act, 2025 (NTAA 2025) relating to the assignment of outstanding tax debts to third parties for tax collection.

Introduction

Section 68, Nigeria Tax Administration Act, 2025, empowers LIRS to assign the collection of outstanding tax debts to duly appointed third parties, including financial institutions, debt recovery practitioners, or any person approved by LIRS, where a taxpayer fails to settle a tax liability after all prescribed legal steps have been followed.

The assignment of collection authority does not relieve the tax defaulter of liability, nor does it limit the powers of LIRS to take additional enforcement actions where necessary. LIRS may reassign the debt; Issue substitution orders; resume recovery actions, including distrain, garnishee, or prosecution.

Implications of Assignment

Upon assignment of such liability to an approved debt recovery agent:

• The appointed agent is authorised to demand, recover, and receive payment of the outstanding tax;
• Any payment made to the authorised agent shall be deemed a payment to LIRS;
• The tax defaulter shall cooperate fully with the agent and provide all information required for recovery; and
• The tax defaulter remains liable for any outstanding balance after partial recovery.

 Assignments may be limited to a specific tax period, tax type, or amount, as determined by LIRS.

Compliance Requirements

Upon receipt of an official assignment from LIRS, an appointed agent shall:

• Notify the tax defaulter of the assignment in the format prescribed by LIRS;
• Collect the outstanding tax debt and remit the same to LIRS via the e-Tax platform (www.etax.lirs.net);
• Maintain accurate records of collections and engagements;
• Submit periodic reports to LIRS as required; and
• Apply fair, transparent, and lawful collection practices at all times.

Agents must strictly comply with confidentiality obligations and any terms or conditions specified in the assignment instrument.

Obligations of Taxpayers

Taxpayers whose outstanding liabilities have been assigned for collection shall:

• Engage promptly with the appointed agent upon notification;
• Provide truthful, complete, and verifiable information where required;
• Settle outstanding tax debts within the stipulated timeframe; and
• Notify LIRS immediately of any disputed amounts.

Failure to cooperate with an authorised agent shall constitute non-compliance with LIRS directives.

Penalties for Non-Compliance

Failure to settle outstanding tax debts assigned for collection may result in:

• Accrual of penalties and interest on unpaid taxes;
• Additional enforcement actions under the NTAA 2025; and
• Possible criminal sanctions for deliberate evasion or obstruction.

Assigned agents who fail to comply with the terms of their assignment may be subject to:

• Withdrawal of authorisation; and
• Liability for any losses arising from negligence or misconduct.

Key Takeaway: Taxpayers with outstanding tax liabilities are strongly advised to regularise their tax positions promptly. LIRS may assign the recovery of unpaid taxes to approved third-party agents where liabilities remain unsettled, without prejudice to its statutory enforcement powers.