• 15 Marks

TAX – May 2024 – L2 – SA – Q6 – Tax Administration and Enforcement

List FIRS Board members, outline FIRS duties, and explain tax dispute basis.

Mr. Abiodun James returned to Nigeria after a long period in America. In 2018, he incorporated James and Sons Nigeria Limited. At a board meeting in August 2021, the company’s accountant presented a tax query from the Federal Inland Revenue Service (FIRS) for review. Some directors believed that since external auditors were engaged, the FIRS should rely on their competence to confirm the accuracy of audited financial statements. The Managing Director clarified the role of the FIRS in corporate tax administration, managed by the Federal Inland Revenue Service Board (FIRSB).

Required:
a. State five members of the Federal Inland Revenue Service Board. (5 Marks)
b. Outline and briefly explain five duties of the Federal Inland Revenue Service (FIRS). (5 Marks)
c. Explain the basis for tax disputes that may arise with the Revenue. (5 Marks)

a. Members of the Federal Inland Revenue Service Board (FIRSB):

  1. Chairman of the FIRS
  2. Representatives from each of the six geopolitical zones of Nigeria
  3. Representatives from ministries such as Finance, and Justice
  4. Governor of the Central Bank of Nigeria (or representative)
  5. A Secretary appointed by the board who is not a member

b. Duties of the Federal Inland Revenue Service (FIRS):

  1. Assessing, collecting, and accounting for taxes: FIRS ensures accurate tax assessment, collection, and recording.
  2. Enforcement of compliance: Ensures entities comply with tax laws and pursues penalties for non-compliance.
  3. Issuing guidelines and clarifications on tax laws: Provides interpretations and guidelines on tax matters.
  4. Collaborating with international tax bodies: Engages with global tax organizations to harmonize standards.
  5. Managing taxpayer disputes: Addresses and resolves tax disputes through established procedures.

c. Basis for Tax Disputes with the Revenue:
Tax disputes can arise when taxpayers disagree with assessments issued by FIRS. Discrepancies may involve different interpretations of tax laws, accounting standards, or acceptable expenses. Disputes often occur over perceived excessive assessments, exemptions, or when FIRS identifies income as taxable that a taxpayer disputes.

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