The Lagos State Internal Revenue Service’s Director of Legal Services, Seyi Alade, speaks to ARINZE NWAFOR on how the agency is ramping up its drive for more residents to file returns and avoid tax evasion

Why is the LIRS emphasising personal filing of taxes?

Filing returns is a constitutional obligation. Section 24(1)(F) of the Constitution of the Federal Republic of Nigeria, 1999, as amended, provides that every citizen must declare their income truthfully to the appropriate tax authority and, upon that declaration, pay all assets due to the tax authority. It is not just a matter of tax law; it has its foundation in the Constitution. It is a statutory and constitutional duty of every citizen to file their returns on or before March 31.

From the first day of January of any new year, you can begin to file your returns. Apart from the employers of labour, every other person has until March 31 to file. If a resident fails to file beyond that date, you are already guilty of an offence. In that case, there is a strict liability offence for failing to file returns.

Why is the LIRS asking individuals to file taxes, whereas most residents know employers file employees’ taxes?

Section 41 of the Personal Income Tax Act makes tax filing everyone’s duty, not just employees. We are talking about employees and others who are self-employed, including those who run businesses.

This is a point of misconception that we have been throwing a lot of light at. Section 41 is clear. It says income from all sources. The emphasis is income from all sources. One may be an employee, for example, a public servant whom the law permits to engage in agricultural business and who may have inherited properties from late parents where they derive rental income. That rental income is an income. Whatever I get from my agriculture business is an income. Despite being an employee, these are other sources of income for me, and the LIRS deducts their taxes.

Many residents have multiple streams of income, so the argument that an employer has already deducted taxes from a worker’s emoluments every month does not hold.

There is also the situation where one does not have other income streams apart from their employment income. Now, in that situation, the employee may want to do something with some foreign embassies, or travel or engage in one activity for which they are asked to present their tax clearance certificate, only to find out from the tax authority or agency that the employer failed to remit the tax deducted from the employee’s salary. Drafters of the law know what they are doing, as this is one of the activities acting as a check and balance.

When an employee files their returns and their employer fails to remit all they had deducted from the employee in a year, the LIRS can come to the employee’s rescue and state that the tax authority does not have records of tax remissions done on behalf of the employee.

It is in everyone’s best interest to file returns because of situations where a failure to do so could become an Achilles heel for them when they may desperately need their tax clearance.

Would residents have broken any laws if they fail to beat the March 31 deadline?

Yes, penalties begin to accrue when you cross the deadline.

What are these penalties?

We have different penalties. The law stipulates monetary penalties, but they go beyond that. A person can be prosecuted for failing to declare and get assessed on their other sources of income for constituting tax evasion. This is notwithstanding if the person is an employee whose employer has been remitting taxes on his or her behalf.

A failure to file returns on other sources of income might be a concerted effort towards evading taxes on your other sources of income. We should not only look at the provisions of Section 95(1) about failure to file returns, which includes a fine, double the amount of tax that was undercharged due to the incorrect filing, but also prosecution for tax evasion.

How can residents learn how to file their returns?

The agency has made filing returns very simple. I am a lawyer and do not call the services of an accountant when I file my returns because the process is seamless.

When you visit the e-tax website and click on the link for filing returns, you register, and the questions are pretty straightforward. The old regime, when we had multiple pages of questionnaires to answer to qualify as having filed our returns, is gone.

At the moment, we have barely two pages, and the questions are simple. One can file returns in the comfort of the bedroom. The computation and assessments can even be done on that e-tax portal.

What are the legal options protecting taxpayers?

We do everything in the LIRS in strict compliance with the law, that is, the Personal Income Tax Act.

The law provides that when one has filed his returns and the tax authority raises an assessment based on what the taxpayer may have filed, should the taxpayer disagree with the assessed amount after being served the assessment notice, the taxpayer has 30 days within which, and upon receiving the objection, to be invited by the tax authority. The law requires a taxpayer objecting to state what parts they are contesting.

What the taxpayer is not contesting — which becomes what you have agreed with in that case — is meant to be paid. The taxpayer pays while objecting to the part that they disagree on.

For instance, a taxpayer has been assessed N1m for 2024 as his tax liability for that year. If based on the taxpayer’s informed calculation for which he has documentary evidence to support, it says: ‘No, I owe a tax liability of N600,000. I do not know where the agency got this extra 400,000 from. I have paid the N600,000, and here are my reasons for contesting the N400,000. I have supplied documentary evidence to support my objection.’



https://punchng.com/lagos-to-enforce-personal-tax-filing-lirs-director/