MICK Wallace doubled the directors' fees paid to himself and his son as his building firm hit huge financial difficulties.
Mr Wallace ensured the total fees shared between himself and his son Sasha increased from €148,000 to €290,000 in 2008.
He admitted he under-declared VAT payable by his company the following year, which has meant a €1.4m tax bill has remained unpaid.
Company records show M&J Wallace paid to the father and son, the only directors, a total of €290,000 when it made a €2.6m loss.
Deputy Wallace was forced to agree to a €2.1m settlement with the Revenue Commissioners.
The Wexford TD said he will not resign his seat in the Dail and admitted he is unlikely ever to pay the millions owed to the Revenue Commissioners.
His companies owe some €40m to banks following the property crash. He said he intends to fight against threats to declare him bankrupt. A TD is required by law to resign if declared bankrupt. He made the tax settlement before he was elected a TD for Wexford.
Most of the Independent TDs who make up the Technical Group - of which Mr Wallace is a member - have been muted on Deputy Wallace's tax debacle.
When Dublin TD Finian McGrath was asked if Deputy Wallace should resign, he replied: "I don't do hangings and I don't do the high moral ground. It is up to the people of Wexford."
Mr Wallace maintains that he believed he would be able to pay the VAT at a later stage.
The doubling of his director's fees occurred before Mr Wallace's tax issues arose but at a time when the company was heading into financial trouble.
He is not personally liable to make the payment to the Revenue as it is the debt of his company which is now insolvent.
He may not face prosecution because Revenue has opted for a settlement. ACC Bank secured a €19.4m judgment against MJ Wallace Ltd last November.