The Criminal Assets Bureau (CAB) is seeking €2 million from disgraced former Fianna Fáil minister, Mr Ray Burke.
He has been given a month to lodge an appeal.
His home was raided by CAB officers last year after the interim report of the Flood Tribunal in September 2002 found Mr Burke had received corrupt payments from builders and two directors of the State' first independent national radio station.
The payments totaled £130,000 (€165,000). The acquisition of his home in Swords was also found to be corrupt.
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Two CAB detectives handed a letter to Mr Burke at his Whitehall home in person demanding €2 million in unpaid tax and undeclared income. It is understood the notice was served sometime in the past two weeks.
Mr Burke is entitled to contest the demand and seek a settlement with the Revenue Commissioners. He can also pursue the matter through the courts if agreement is not reached.
If the former Fianna Fáil minister decides to contest the demand, the onus of proving it unfounded will rest with him. If it is decided Mr Burke does owe money his assets can be seized if he is unable to pay in cash.
Mr Burke was unavailable for comment today.
The move has been welcomed by Labour Justice spokesman, Mr Joe Costello, who said the Taoiseach's description of Mr Burke as "honourable" raised questions about Mr Ahern's judgement.
"Mr Ahern has been either extraordinarily unlucky with his political friends or has shown exceptionally poor judgement in those he has chosen as his political associates," Mr Costello said.
The conviction of former assistant Dublin city and county manager, George Redmond, on corruption charges and today's move sends a message to corrupt public office holders, that they will be "called to account", he added.
The Green Party's Mr Ciarán Cuffe said he hoped the move were an indication that "white collar crime and political corruption will now be tackled seriously."
He said it made a mockery of Mr Ahern's defence of Mr Burke as an "honourable man".