Fianna Fáil has written to the Limerick West TD, Mr Michael Collins, informing him that his €130,000 tax settlement with the Revenue is now the subject of a formal investigation within the party, which is expected to confirm the appointment of an independent investigator later this week.
Mr Collins resigned the Fianna Fáil whip earlier last month after it was revealed that he had defaulted on taxation obligations connected to a bogus non-resident account.
The interest and penalties element of his liability was €98,601.
While senior figures in Fianna Fáil and some TDs had known for months that Mr Collins was to be identified by the Revenue, the PDs were not informed of the settlement.
The party has said that Mr Collins moved last June to inform the Taoiseach, Mr Ahern, that he would be named. Mr Ahern's failure to question the TD about his tax affairs was strongly criticised by the Opposition, who seized on the development before the Dáil resumed after the summer recess.
Despite his resignation from the parliamentary party, Mr Collins remains a member of Fianna Fáil.
Depending on the outcome of the investigation, it is open to the party's Standards in Public Life Committee to expel him.
It is also open to the committee to make a recommendation to the party's National Executive that Mr Collins be told to vacate his Dáil seat.
The standards committee will decide on a sanction, if any, after the investigator's report is produced. Chaired by Mr Séamus Kirk TD, its membership includes the Fianna Fáil general secretary, Mr Seán Dorgan; and Mr Seán Power TD and Mr Seán Fleming TD.
A Fianna Fáil spokeswoman said the investigation was proceeding and confirmed that Mr Dorgan wrote last week to Mr Collins informing him that the process was under way.
The TD's tax affairs are also subject to a separate investigation by the Standards in Public Office Commission, which monitors whether Oireachtas members comply with taxation law.
This process may have a crucial bearing on the party's internal inquiry because the outcome of the two investigations will be compared.
Any adverse findings by the Standards in Public Office Commission will be measured against the results of the investigation by Fianna Fáil, which insists that it no longer tolerates improper behaviour by TDs.
Mr Collins has repeatedly claimed that he had "complied at all times with the legal requirements which are laid down" by the commission.
Under electoral laws, however, TDs must secure a tax clearance certificate from the Revenue within nine months of a general election.
They must also swear an oath that they are in compliance with tax laws.
