There are several ways by which Tax Authorities can retrieve or recover overdue tax liabilities from recalcitrant tax payers. One of which is the power of substitution; whereby the tax authority appoints a person or an institution as a collecting agent for the tax liabilities owed by another person. The appointed person is usually in a privileged position to the tax payer’s financial and monetary information.
The Tax authorities are empowered by law to appoint anyone as collecting agent to help retrieve long overdue Tax liabilities from the erring taxpayer.
The Position of the law is quite clear and unequivocal about this:
POWER OF SUBSTITUTION/ POWER TO APPOINT AGENT
- Section 49 Company Income Tax Act Cap C20 LFN, 2004 reads;
“(1) The Board may by notice in writing appoint any person to be the agent of any company and the person so declared the agent shall be agent of such company for the purposes of the Act, and may be required to pay any tax which is or will be payable by the company from any moneys which may be held by him for, or due by or to become due by him to, the company whose agent he has been declared to be, and in default of such payment the tax shall be recoverable from him.
(2) For the purposes of this section, the Board may require any person to give information as to any moneys, funds or other assets which may be held by him for, or of any moneys due to him to, any company.
(3) The provisions of this Act with respect to objections and appeals shall apply to any notice given under this section as though such notice were an assessment.
Section 28 Federal Inland Revenue Service (Establishment) ACT, 2007 reads;
(1) Without prejudice to section 26 of this Act, every bank shall prepare upon demand by the Service, quarterly returns specifying-
(a) In the case of an individual, all
transactions involving the sum of N5,000,000.00 and above; or
(b) In the case of a body corporate, all transactions involving the sum of N10,000,000.00 and above, the names and addresses of all customers of the bank connected with transaction and deliver the returns to the Service;
(c) the names and addresses of
new customers of the bank shall not later than the seventh day of the succeeding month deliver the returns to the Service.
(2) Subject to subsection (1) of this
action, for the purpose of obtaining information relative to taxation, the Service may give notice to any person including a person engaged in banking business in Nigeria to provide within the time stipulated in the notice, information including the name and address of any person specified in the notice:
Provided that a person engaged in banking business in Nigeria, shall not be required to disclose
any additional information about his customer or his bank under this section unless such additional disclosure is required by a notice signed by the Executive Chairman of the Service on the advice of the Technical Committee of the Board.
(3) Any bank that contravenes the
provisions of this section commits an offence and shall on conviction be liable to affine not exceeding N500,000.00 on corporate customers and not exceeding N50,000.00 in the case of an individual customer.
- Section 29 Federal Inland Revenue Service (Establishment) ACT, 2007 reads;
(1) Notwithstanding anything to the contrary in any other enactment or law, an authorized officer of the Service shall at reasonable tomes have free access to all land, buildings, places, books and documents, in the custody or under the control of a public officer, institution or any other person, for the purpose of inspecting the books or documents including those stored or maintained in computers or on digital, magnetic, optical or electronic media, and any property, process or matter which the officer considers necessary or relevant for the purpose of carrying out any other function lawfully conferred on the Service or considered likely to provide any information required for the
purposes of any of those enactments or any of those functions and may, without fee or reward, make extract from, or copies of, such books or documents
(2) Where the hard copies of any of
the books or documents mentioned in subsection(1) of this section are not immediately available because they are stored in a computer or on digital, magnetic, or optical, or electronic, media, the Service shall take immediate possession of such removable media and the related removable equipment or computer used to access the store documents on the media in order to prevent the accidental or intentional destruction, removal or alteration of records and documents, especially where such could be needed as potential evidence in the investigation or criminal proceedings
(3) Where the Service is able to
obtain in place of taking physical possession of such computer or storage media under subsection of the section, and the Service possesses the ability equipment and computer software to make exact duplicate copies of all information stored on the computer hard drive and preserve all the information exactly as it is on the original computer, the Service shall make such copy and use it as digital evidence during the investigation or criminal proceedings
- Section 50 of the Personal Income
Tax Act 2007 says:
“(1) The relevant tax authority may by notice in writing appoint a person to be the agent of another person and the person so declared as agent shall be the agent of that person for the purposes of this Act, and may be required to pay tax which is or will be payable by the person from any money which may be held by him for, or due by or to or become due by him to, the person whose agent he has been declared to be, and in default of that payment the tax shall be recoverable from him.
(2) For the purposes of this section, the relevant tax authority may require any person to give information as to any money, fund or other asset, which may be held by him for, or of any money due to him to any person.
(3) The provisions of this Act with respect to objections and appeals shall apply to any notice given under this section as though that notice were an assessment.”
- Section 38 of Lagos State Revenue
Administration Law reads –
(1) The Internal Revenue Service may by notice in writing appoint a person to be the agent of another person and the person so declared as agent shall be the agent of that person for the purpose of this Law, and may be required to pay tax which is or will be payable by the person from any money which may be held by
him for, or due by or to become due by him to the person whose agent he has been declared to be, and in default of that payment the tax shall be recoverable from him.
(2) For the purpose of this Law, the
Internal Revenue Service may require any person to give information as to any money, fund or other asset which may be held by him for, or any money due from him to any person.
(3) The provisions of this Law with respect to objections and appeals shall apply to any notice given under this Section as though that notice were an assessment.
From the fore going laws, the position of all relevant laws is made known and are all equivocal in their stand. The person(s) so appointed has no option but to accept this status as a collecting agent for the recovery of the tax debt.
Failure to act in this capacity renders the appointed agent liable to the extent that the Tax Liability in question will be recovered from the agent.
