FIRS and the power of tax administration

FIRS Chairman, Mohammed Nami

This article is to educate the public on the power of FIRS with regard to tax collection as a means of revenue generation for government

Over the years, there have been experiences of clash, controversy, misunderstanding and widespread ignorance of the powers, roles, responsibilities and mandate of the Federal Inland Revenue Service (FIRS) to administer tax laws for revenue generation for the federal government.

That has resulted in countless legal and administrative tussles, which sometimes deny the government of its due revenues and at other times help to address over and under remitance, amongst others.

In all of that, the objectives of FIRS are to control and administer the different taxes and laws specified in the first schedule or other laws made or to be made from time to time by the National Assembly or other regulations made there under by the government of the federation and to account for all taxes collected.

FIRS relationship with the Ministry of Finance

Historically, tax collection functions have been within the Ministry of Finance, and at present, for Nigeria, its tax administration body – FIRS has an autonomous status to administer taxes for the government, independent but within a broad umbrella of the Ministry of Finance for oversight. FIRS Chief Executive is appointed by the President of Nigeria.

The idea is that it is important for FIRS to have an autonomous status to fulfil its mandate due to its extensive office network (150 tax offices nationwide); specialized functions in the assessment and collection of taxes; need for efficiency and effective management and administration and need to be free from political interference in day-to-day operations, among others.

FIRS tax administration mandate

Tax administration for FIRS involves the registration, assessment, returns, collection, compliance monitoring and enforcement, taxpayers’ education and awareness and other activities to improve the efficiency and effectiveness of taxation.

The FIRS (establishment) Act 2007 provides for the establishment and empowerment of the Federal Inland Revenue Service with the powers of assessment, collection, and accounting for revenues accruable to the Government of the Federation; and for related matters.

Tax administration mandate:

Among other mandates of the revenue watchdog, it has the mandate of registration of taxable persons, tax assessment, collection, compliance monitoring and enforcement. The implication is that taxpayers are required to submit relevant and timely information as required by their applicable tax authority. Beyond individuals, the FIRS has the mandate from federal government to register corporate entities/taxpayers for taxes within their jurisdiction.

While the State Boards of Internal Revenue have the jurisdiction to register individuals who are either in employment or are running their own small businesses, under a business name or partnership. All taxable persons in either jurisdictions shall be registered and issued with unique number called Taxpayer Identification Number (TIN) applicable nationwide, to enable them pay taxes.

FIRS leverages on the database integration with the Central Bank of Nigeria on Bank Verification Number (BVN), National Identity Management Commission (NIMC), Nigeria Communication Commission (NCC), Corporate Affairs Commission (CAC), Federal Road Safety Commission (FRSC), Nigeria Immigration Service (NIS) respectively and other relevant sources during this stage of the tax process.

Call for returns, books, documents and information

For the purposes of obtaining full information in respect of the taxation of an ‘individual, company or any person or for the purpose of performing any function conferred on it by the enabling Act of 2007, the service shall give notice to any individual, company or person, require such individual, company or person, within the time specified by the notice to call for further returns and payment of tax due.

The law recommends the service to give notice in writing to any person it considers necessary requiring such person to deliver within a reasonable time specified in such notice, further returns in respect of any matter relating to the functions of the Service under this Act.

If tax liability is not paid, the person in default shall, in addition to the 100 percent tax due and payable, also be liable to a penalty equal to the amount of tax due and payable.

Power to access lands, buildings, books and documents

The FIRS establishment Act also enables an authorized officer of the Service to

At all reasonable times have free access to all lands, 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 collecting any tax under any of the relevant enactment or law or 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.

Where the hard copies of any of the books or documents mentioned in the above are not immediately available because they are stored in a computer or on digital, magnetic, 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.

Power to remove books and documents

An officer of the Service authorized by the Executive Chairman, may  remove books or documents accessed under section 29 of the FIRS Establishment Act to make copies.

Any copy of the books or documents removed shall be made and the books or documents returned as soon as practicable.

A copy of a book or document or digital evidence certified by or on behalf of the Executive Chairman is admissible in evidence in court as if it were the original.

The owner of a book or document that is removed under this section is entitled to inspect and obtain a copy of the book or document, at the owner‘s own expense, at the premises to which the book or document is moved to- (a) at the time the book or document is moved to the premises; and (b) at reasonable times subsequently.

 Power of substitution

The Service may by notice in writing appoint any person to be the agent of a taxable person if the circumstances provided in sub-section (2) of this section makes it expedient to do so.

The agent appointed under subsection (1) of this section may be required to pay any tax payable by the taxable person from any money which may be held by the agent of the taxable person.

Where the agent referred to in subsection (2) of this section defaults, the tax shall be recoverable from him.

For the purposes of this section, the Service may require any person to give information as to any money, fund or other assets which may be held by him for, or of any money due from him to, any person.

Recovery of tax

Not many people know that the enabling laws provides that any amount due by way of tax should constitute a debt to the service and may be recovered by a civil action brought by the Service.

According to the FIRS Act, where a tax has been under-assessed or erroneously repaid, the person who should have paid the amount under-assessed or to whom the repayment has erroneously been made shall on demand by the proper officer, pay the amount under-assessed or erroneously repaid, as the case may be, and any such amount may be recovered as if it were tax to which a person to whom the amount was so under-assessed or erroneously repaid were liable: provide that the appropriate officer shall not make any such demand after five years from the date of such under-assessment or erroneous repayment unless such under-assessment or erroneous repayment was caused by the production of a document or the making of a statement which was untrue in any material particular.

 Tax Investigations

In times of observed infractions, the service  is expected to employ special purpose tax officers to assist any relevant law enforcement agency in the investigation of any offence under this Act.

The service also has the power to investigate or cause investigation to be conducted to ascertain any violation of any tax law whether or not such violation has been reported to the Service.

 Enforcement of powers

FIRS is allowed to co-opt the assistance and co-operation of any of the law enforcement agencies in the discharge of its duties.The law enforcement officers are by that intervention expected to aid and assist an authorized officer in the execution of any warrant of distraint and the levying of distraint.

Immunity from action

A tax collector shall not be liable in any action or proceeding, whether civil or criminal, for anything done or said by him in the lawful exercise of his role.

Information and documents to be confidential

Without prejudice to the provisions of any other Act concerning data privacy, data protection and unlawful disclosure of taxpayer information, taxpayer information shall be confidential.

Except as otherwise provided under the FIRS establishment Act, any other law or any enabling agreement or arrangement or as otherwise authorized by the Minister, any member or former member of the Board or any employee or former employee of the Service or any agent or any other person who communicates or attempts to communicate taxpayer information to any person other than to a person legally authorised to collect the tax or misuses the information, commits an offence and shall be liable on conviction to a fine not exceeding N1,000,000.00 or to imprisonment for a term not exceeding three years or to both.