The Beatles in 1966, released a song titled ‘Taxman’. The lyrics go thus:

“If you drive a car, I’ll tax the street,

If you try to sit, I’ll tax your seat,

If you get too cold I’ll tax the heat,

If you take a walk, I’ll tax your feet.


Don’t ask me what I want it for

If you don’t want to pay some more.

‘Cause I’m the taxman, yeahh I’m the taxman.”


The lyrics above depict what majority think about the tax authorities (i.e. the Taxmen), thanks to their revenue generation spree. More importantly, it shows that it is generally accepted that the tax authorities at various levels of government, are responsible for collecting taxes.

It is then no surprise that the Federal Inland Revenue Service (FIRS) appointment of banks to collect and pay taxes owed by thousands of taxpayers directly from their accounts was described by Taiwo Oyedele of PwC as an ‘unconventional mechanism for the collection of tax’.

This power, also known as the Power of Substitution (PoS), is granted to the FIRS by Section 31 of the FIRS Establishment Act of 2007 (FIRSEA), Section 49 of the Companies Income Tax Act (CITA) and Section 50 of the Personal Income Tax Act (PITA) which gives the FIRS the ‘power to appoint any person to be the agent of a taxable person for the purpose of recovering tax debts or tax payable from such taxable person’. The appointment was stated to come into effect within seven (7) days from delivery of the letters of appointment.

FIRS through PoS can bypass Life is Eazi Ltd, a taxpayer with a current account in Money Miss Road Bank Plc, telling the Bank to pay to it any amount it claims Life is Eazi Ltd owes as taxes from its account. Money Miss Road Bank will be liable for the tax requested if it refuses to pay.

FIRS can also ask for information about anything in Life is Eazi Ltd’s account and can freeze the account, restricting Life is Eazi from making any transaction on its account, including paying its worker’s salaries, except with FIRS express permission.

FIRS in its appointment letter appoints Money Miss Road Bank as agent to Life is Eazi Ltd., so if Money Miss Road pays FIRS behind Enny Money’s back as PoS requires, it breaches its duty of agency and confidentiality to Life is Eazi Ltd.

If Money Miss Road Bank doesn’t pay the FIRS and Life is Eazi Ltd. actually owes tax, the bank will be in deeper trouble with FIRS. The manager of Money Miss Road Bank is now certain that the Bank has missed road. There is confusion everywhere.

It is apparent that many controversial issues arise from PoS even though it has legal backing. The FIRS does not give the banks any assurance that they will be exempted if they get into any trouble for breaching their duty to their customers. This is like pushing someone into a pit and misplacing the ladder – they can’t come out and you can’t save them.

The FIRS is also not given the authority by the laws above to freeze a taxpayer’s entire account. It should only have control over tax that is confirmed as duly payable by a taxpayer. FIRS acts outside its powers by freezing any other money not within its control. It is also not nice for the FIRS to go behind the taxpayers’ backs to message the banks. The taxpayers sincerely may not know of any pending liability to the tax authorities, only to then receive a rude shock when they learn of all the deduction and freezing.

The Taxman imposing its collection duty on banks is not sustainable. This was further proved when the FIRS wrote again to Banks to unfreeze taxpayers accounts for a period of 30 days. It could not bear the outrage by bank customers and other stakeholders. The lift was also partly due to the fact that many whose accounts were freezed, began to pay their taxes as they were supposed to. This shows that the PoS may be useful for revenue generation but due to its many downsides, it should only be engaged when ‘expedient’ as provided for by the FIRS Act. The taxman may be better off playing its widely accepted role of collecting taxes alone.


Tolulope Olayiwola is a final year student of the Faculty of Law, University of Lagos with interests in Taxation, Intellectual Property and Trusts. She is currently the Director of Research of the Tax Club, University of Lagos. She hopes to use her writing and knowledge of tax to simplify it for the common man to understand.

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