The Department of Finance has warned that it may not be possible for the State to seize the money unclaimed in dormant bank accounts, despite the Government's commitment to examine the matter following the DIRT inquiry.
Department of Finance officials believe it "would not be easy to formulate a proposal and draft legislation in a way which would eliminate the risk of a successful legal challenge", according to documents released to The Irish Times under the Freedom of Information Act.
One of the recommendations of the Report of the Oireachtas Committee of Public Accounts on the evasion of DIRT tax through bogus non-resident accounts was that legislation be introduced so the State could seize the money in dormant accounts.
These funds would then be used "for specified purposes of societal and community benefit".
The official advice is contained in a series of supplementary answers prepared for a reply to a parliamentary question from Mr Jim O'Keeffe, of Fine Gael, which the Minister for Finance, Mr McCreevy, answered on December 14th last.
One supplementary question anticipated by the officials asks: "Why is the Minister so reluctant to seize the funds in dormant accounts?"
The draft reply, which was not read into the Dail record, notes that "the State does not have any natural or statutory entitlement to the funds in non-active bank accounts".
The reply also says that "for the State to sequester a person's bank account simply by virtue of it not being used could raise serious legal and constitutional issues in relation to property rights".
This difficulty would apply "especially where the owner of the account or his heirs or successors are still alive", the reply notes.
The issue has been under consideration by Mr McCreevy's officials for more than two years, without any apparent movement. However, following the release of the DIRT report, the Government appears to have given it greater urgency.
The Attorney General's Office is now examining the legal and constitutional consequences of introducing legislation on dormant accounts.
The treatment of the money in such accounts varies between the member-states of the European Union.
While in Greece and Luxembourg there are no provisions, in France the state receives the money in such accounts after 30 years. The government may impose a five-year limit on such accounts.
The documents released under the Freedom of Information Act indicate that the Minister "could not be confident" about figures from the financial institutions that there is some £15 million in deposit accounts, above a certain threshold, dormant for 20 years or more.
It is estimated that more than £25 million lies unclaimed by people who have failed to collect on matured life assurance policies.
Standard Life indicated last year it had about £2 million in such unclaimed policies in values ranging from £20 to £30,000.
These figures suggest that the State could expect a multi-million-pound windfall should the Government disregard official advice and act upon the DIRT report recommendation on dormant accounts.