The Garda Criminal Assets Bureau has served a tax demand understood to be around £300,000 on Mr John Walsh, the cattle dealer who imported lambs from Carlisle in Scotland where foot-and-mouth disease occurred.
Mr Walsh's activities prior to the first outbreak of the disease at a farm in Meigh, Co Armagh, are being investigated by the Garda, RUC and British police.
The serving of the Revenue bill by the Criminal Assets Bureau last week is the first significant action by police over smuggling that has contributed to the spread of the disease. Garda sources say that further action will take place.
Two detectives from the bureau travelled to England last Tuesday and served the tax demand on Mr Walsh (50) who has property in Co Offaly.
Under the terms of the Criminal Assets legislation introduced in 1996, the bureau can seek settlement of outstanding tax in cases where suspected criminal activity, which would include smuggling, has taken place. If there is no settlement, it can seize property to an equivalent value and sell it.
Mr Walsh has agreed that he bought the consignment of sheep from Carlisle Mart and brought the animals to a farm belonging to Mr Maurice Collins at Meigh, in south Armagh, on Sunday, February 18th.
It is believed around 300 lambs were imported. Police and agriculture officials on both sides of the Border have had difficulty ascertaining the exact movements of the infected lambs once they reached Meigh.
Mr Walsh sought immunity from prosecution in return for divulging the exact movements of the lambs. He said on RTE radio that Minister Walsh, "has ruled out any possibility of an amnesty for traders, dealers or farmers who may have brought sheep or cattle illegally into the Republic in recent months".
Mr Walsh also denied claims from the Northern Department of Agriculture that he failed to co-operate in their efforts to trace infected sheep.
He has also denied he knowingly committed any fraud and said he had never been registered for VAT.