Mind Your Tax Affairs: Power to Recover Tax Liabilities

The Federal Inland Revenue Service (FIRS) is empowered to assess and collect established tax liabilities from entities. The tax laws also empowered the tax authority to charge and collect administrative penalties such as late returns penalty, penalty late payment, etc. Tax Authorities do not have powers to impose taxes, only a court of law can impose taxes, fines or charges upon conviction.

Where there is an established tax liability against an entity or the tax liability assessed against an entity has become final and conclusive, but the entity failed to defray the tax liability, the Tax Authority can appoint any person or institution (e.g. banks) as an agent to collect the unpaid tax on its behalf from the entity.

Also, an established tax liability (Companies Income Tax (CIT), Tertiary Education Tax (TET), Capital Gains Tax (CGT), Value Added Tax (VAT) and Withholding Tax (WHT)), of an entity can be recovered from:
• the entity – e.g. XYZ LTD.
• the/any principal officer of the entity – e.g. Managing Director, CEO, etc.
• the/any person appointed by the entity as attorney, factor, agent or a representative.
• a receiver or liquidator.

While entities are to comply with the provisions of the tax laws in terms of filing and payment of taxes, it is important to state that, no Tax Authority has powers or right to place lien on the bank account of an entity where a tax liability is yet to be established or when a tax liability is in dispute.

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