AIB and the Revenue Commissioners fundamentally disagree on the deal brokered on DIRT liabilities in February 1991. AIB maintains it secured an amnesty on DIRT liabilities pre-1991.
But the Revenue says this never happened, although it accepts it never followed up on collecting the outstanding taxes.
The fundamental disagreement centres on a letter issued to AIB in 1991 by a senior inspector attached to the investigation branch of the Revenue Commissioners.
AIB claims the letter provides proof of an "evolving situation" which culminated in an agreement that the bank was not required to collect and pay DIRT retrospectively for bogus non-resident accounts up to June 1991. AIB's copy of the letter has been modified by a reference to telephone calls and meetings after that date which it claims supports its position.
The Revenue contends the letter represents an arrangement not to pursue penalties or publish these settlements and not to initiate any prosecutions provided AIB paid DIRT due on bogus non-resident accounts up to June 30th, 1991.
It claims the AIB notes of conversations and meetings do not represent accurate accounts of what took place and the Revenue is seeking payment of DIRT liabilities for the entire period during which bogus non-resident accounts were held.
The meetings were initiated by a phone call between AIB's tax compliance manager, Ms Deirdre Fullen, and Mr Tony McCarthy, senior inspector of taxes at the investigation branch, in relation to a number of individual bogus non-resident accounts at the bank.
According to AIB, Mr McCarthy told Ms Fullen he wished to "widen the agenda" for their next meeting to deal with the situation as it related to AIB branches in the Republic. He said the Revenue "do not hold AIB in high esteem" and that "certain issues keep recurring". He concluded the conversation saying that if AIB was prepared to be pragmatic "the Revenue are prepared to look forward rather than back".
AIB contends that further contacts with Mr McCarthy confirmed to them at a meeting in April and in subsequent contacts that they had an effective amnesty on pre-1991 DIRT liabilities.
An AIB note at the time said: "They do not propose to charge any penalty nor to have any publication. What the Revenue wish for is an amicable resolution of the whole issue."
The Revenue insists there is no evidence or recollection of any agreement to provide AIB with an amnesty on unpaid DIRT.
"The Revenue is quite clear that neither senior management nor the board considered or approved any arrangement involving the waiving of past DIRT liabilities. It is not credible that, in the context of such an important matter, such confirmation would be sought from the officer concerned and not from his superiors. The bank officials involved would have sufficient knowledge of the tax code and Revenue procedures to know that a senior inspector could not grant an amnesty."
The Revenue does accept, however, that it failed to follow up in seeking DIRT arrears arising out of the bogus non-resident accounts owed by AIB. Its chief of taxes, Mr Mac Carthaigh, says there was not a follow-through, blaming pressure of work. "At that time I was moving on to what was and turned out to be a fairly serious problem in the drinks industry which preoccupied a substantial proportion of my time. I expected them to come back."