diff --git a/src/components/MoneyRequestConfirmationList.js b/src/components/MoneyRequestConfirmationList.js
index f203154ab3db..1b4967a9c54c 100755
--- a/src/components/MoneyRequestConfirmationList.js
+++ b/src/components/MoneyRequestConfirmationList.js
@@ -239,7 +239,7 @@ function MoneyRequestConfirmationList(props) {
     const policyTagList = lodashGet(policyTag, 'tags', {});
     const policyTagListName = lodashGet(policyTag, 'name', translate('common.tag'));
     // A flag for showing the tags field
-    const shouldShowTags = props.isPolicyExpenseChat && OptionsListUtils.hasEnabledOptions(_.values(policyTagList));
+    const shouldShowTags = props.isPolicyExpenseChat && (props.iouTag || OptionsListUtils.hasEnabledOptions(_.values(policyTagList)));
 
     // A flag for showing the billable field
     const shouldShowBillable = !lodashGet(props.policy, 'disabledFields.defaultBillable', true);
diff --git a/src/libs/ReportUtils.ts b/src/libs/ReportUtils.ts
index f6c3090143f4..8f2382111f34 100644
--- a/src/libs/ReportUtils.ts
+++ b/src/libs/ReportUtils.ts
@@ -646,7 +646,7 @@ function isUserCreatedPolicyRoom(report: OnyxEntry<Report>): boolean {
  * Whether the provided report is a Policy Expense chat.
  */
 function isPolicyExpenseChat(report: OnyxEntry<Report>): boolean {
-    return getChatType(report) === CONST.REPORT.CHAT_TYPE.POLICY_EXPENSE_CHAT;
+    return getChatType(report) === CONST.REPORT.CHAT_TYPE.POLICY_EXPENSE_CHAT || (report?.isPolicyExpenseChat ?? false);
 }
 
 /** Wether the provided report belongs to a Control policy and is an epxense chat
diff --git a/src/libs/actions/IOU.js b/src/libs/actions/IOU.js
index 91ec0cd6471b..d9de984ad12c 100644
--- a/src/libs/actions/IOU.js
+++ b/src/libs/actions/IOU.js
@@ -63,34 +63,6 @@ Onyx.connect({
     },
 });
 
-let allRecentlyUsedTags = {};
-Onyx.connect({
-    key: ONYXKEYS.COLLECTION.POLICY_RECENTLY_USED_TAGS,
-    waitForCollectionCallback: true,
-    callback: (value) => {
-        if (!value) {
-            allRecentlyUsedTags = {};
-            return;
-        }
-
-        allRecentlyUsedTags = value;
-    },
-});
-
-let allPolicyTags = {};
-Onyx.connect({
-    key: ONYXKEYS.COLLECTION.POLICY_TAGS,
-    waitForCollectionCallback: true,
-    callback: (value) => {
-        if (!value) {
-            allPolicyTags = {};
-            return;
-        }
-
-        allPolicyTags = value;
-    },
-});
-
 let userAccountID = '';
 let currentUserEmail = '';
 Onyx.connect({
@@ -508,21 +480,9 @@ function getMoneyRequestInformation(
         billable,
     );
 
-    let optimisticPolicyRecentlyUsedCategories = [];
-    if (category) {
-        optimisticPolicyRecentlyUsedCategories = Policy.buildOptimisticPolicyRecentlyUsedCategories(iouReport.policyID, category);
-    }
+    const optimisticPolicyRecentlyUsedCategories = Policy.buildOptimisticPolicyRecentlyUsedCategories(iouReport.policyID, category);
 
-    const optimisticPolicyRecentlyUsedTags = {};
-    const policyTags = allPolicyTags[`${ONYXKEYS.COLLECTION.POLICY_TAGS}${iouReport.policyID}`];
-    const recentlyUsedPolicyTags = allRecentlyUsedTags[`${ONYXKEYS.COLLECTION.POLICY_RECENTLY_USED_TAGS}${iouReport.policyID}`];
-
-    if (policyTags) {
-        // For now it only uses the first tag of the policy, since multi-tags are not yet supported
-        const tagListKey = _.first(_.keys(policyTags));
-        const uniquePolicyRecentlyUsedTags = recentlyUsedPolicyTags ? _.filter(recentlyUsedPolicyTags[tagListKey], (recentlyUsedPolicyTag) => recentlyUsedPolicyTag !== tag) : [];
-        optimisticPolicyRecentlyUsedTags[tagListKey] = [tag, ...uniquePolicyRecentlyUsedTags];
-    }
+    const optimisticPolicyRecentlyUsedTags = Policy.buildOptimisticPolicyRecentlyUsedTags(iouReport.policyID, tag);
 
     // If there is an existing transaction (which is the case for distance requests), then the data from the existing transaction
     // needs to be manually merged into the optimistic transaction. This is because buildOnyxDataForMoneyRequest() uses `Onyx.set()` for the transaction
@@ -920,11 +880,12 @@ function requestMoney(
  * @param {String} comment
  * @param {String} currency
  * @param {String} category
+ * @param {String} tag
  * @param {String} existingSplitChatReportID - the report ID where the split bill happens, could be a group chat or a workspace chat
  *
  * @return {Object}
  */
-function createSplitsAndOnyxData(participants, currentUserLogin, currentUserAccountID, amount, comment, currency, category, existingSplitChatReportID = '') {
+function createSplitsAndOnyxData(participants, currentUserLogin, currentUserAccountID, amount, comment, currency, category, tag, existingSplitChatReportID = '') {
     const currentUserEmailForIOUSplit = OptionsListUtils.addSMSDomainIfPhoneNumber(currentUserLogin);
     const participantAccountIDs = _.map(participants, (participant) => Number(participant.accountID));
     const existingSplitChatReport =
@@ -952,6 +913,7 @@ function createSplitsAndOnyxData(participants, currentUserLogin, currentUserAcco
         undefined,
         undefined,
         category,
+        tag,
     );
 
     // Note: The created action must be optimistically generated before the IOU action so there's no chance that the created action appears after the IOU action in the chat
@@ -1142,6 +1104,7 @@ function createSplitsAndOnyxData(participants, currentUserLogin, currentUserAcco
             undefined,
             undefined,
             category,
+            tag,
         );
 
         // STEP 4: Build optimistic reportActions. We need:
@@ -1190,10 +1153,10 @@ function createSplitsAndOnyxData(participants, currentUserLogin, currentUserAcco
         }
 
         // Add category to optimistic policy recently used categories when a participant is a workspace
-        let optimisticPolicyRecentlyUsedCategories = [];
-        if (isPolicyExpenseChat) {
-            optimisticPolicyRecentlyUsedCategories = Policy.buildOptimisticPolicyRecentlyUsedCategories(participant.policyID, category);
-        }
+        const optimisticPolicyRecentlyUsedCategories = isPolicyExpenseChat ? Policy.buildOptimisticPolicyRecentlyUsedCategories(participant.policyID, category) : [];
+
+        // Add tag to optimistic policy recently used tags when a participant is a workspace
+        const optimisticPolicyRecentlyUsedTags = isPolicyExpenseChat ? Policy.buildOptimisticPolicyRecentlyUsedTags(participant.policyID, tag) : {};
 
         // STEP 5: Build Onyx Data
         const [oneOnOneOptimisticData, oneOnOneSuccessData, oneOnOneFailureData] = buildOnyxDataForMoneyRequest(
@@ -1206,7 +1169,7 @@ function createSplitsAndOnyxData(participants, currentUserLogin, currentUserAcco
             oneOnOnePersonalDetailListAction,
             oneOnOneReportPreviewAction,
             optimisticPolicyRecentlyUsedCategories,
-            {},
+            optimisticPolicyRecentlyUsedTags,
             isNewOneOnOneChatReport,
             shouldCreateNewOneOnOneIOUReport,
         );
@@ -1256,10 +1219,11 @@ function createSplitsAndOnyxData(participants, currentUserLogin, currentUserAcco
  * @param {String} comment
  * @param {String} currency
  * @param {String} category
+ * @param {String} tag
  * @param {String} existingSplitChatReportID - Either a group DM or a workspace chat
  */
-function splitBill(participants, currentUserLogin, currentUserAccountID, amount, comment, currency, category, existingSplitChatReportID = '') {
-    const {splitData, splits, onyxData} = createSplitsAndOnyxData(participants, currentUserLogin, currentUserAccountID, amount, comment, currency, category, existingSplitChatReportID);
+function splitBill(participants, currentUserLogin, currentUserAccountID, amount, comment, currency, category, tag, existingSplitChatReportID = '') {
+    const {splitData, splits, onyxData} = createSplitsAndOnyxData(participants, currentUserLogin, currentUserAccountID, amount, comment, currency, category, tag, existingSplitChatReportID);
     API.write(
         'SplitBill',
         {
@@ -1269,6 +1233,7 @@ function splitBill(participants, currentUserLogin, currentUserAccountID, amount,
             currency,
             comment,
             category,
+            tag,
             transactionID: splitData.transactionID,
             reportActionID: splitData.reportActionID,
             createdReportActionID: splitData.createdReportActionID,
@@ -1290,10 +1255,10 @@ function splitBill(participants, currentUserLogin, currentUserAccountID, amount,
  * @param {String} comment
  * @param {String} currency
  * @param {String} category
+ * @param {String} tag
  */
-function splitBillAndOpenReport(participants, currentUserLogin, currentUserAccountID, amount, comment, currency, category) {
-    const {splitData, splits, onyxData} = createSplitsAndOnyxData(participants, currentUserLogin, currentUserAccountID, amount, comment, currency, category);
-
+function splitBillAndOpenReport(participants, currentUserLogin, currentUserAccountID, amount, comment, currency, category, tag) {
+    const {splitData, splits, onyxData} = createSplitsAndOnyxData(participants, currentUserLogin, currentUserAccountID, amount, comment, currency, category, tag);
     API.write(
         'SplitBillAndOpenReport',
         {
@@ -1303,6 +1268,7 @@ function splitBillAndOpenReport(participants, currentUserLogin, currentUserAccou
             currency,
             comment,
             category,
+            tag,
             transactionID: splitData.transactionID,
             reportActionID: splitData.reportActionID,
             createdReportActionID: splitData.createdReportActionID,
@@ -1832,16 +1798,7 @@ function editRegularMoneyRequest(transactionID, transactionThreadReportID, trans
         updatedChatReport.lastMessageHtml = messageText;
     }
 
-    const optimisticPolicyRecentlyUsedTags = {};
-    if (_.has(transactionChanges, 'tag')) {
-        const tagListName = transactionChanges.tagListName;
-        const recentlyUsedPolicyTags = allRecentlyUsedTags[`${ONYXKEYS.COLLECTION.POLICY_RECENTLY_USED_TAGS}${iouReport.policyID}`];
-
-        const uniquePolicyRecentlyUsedTags = recentlyUsedPolicyTags
-            ? _.filter(recentlyUsedPolicyTags[tagListName], (recentlyUsedPolicyTag) => recentlyUsedPolicyTag !== transactionChanges.tag)
-            : [];
-        optimisticPolicyRecentlyUsedTags[tagListName] = [transactionChanges.tag, ...uniquePolicyRecentlyUsedTags];
-    }
+    const optimisticPolicyRecentlyUsedTags = Policy.buildOptimisticPolicyRecentlyUsedTags(iouReport.policyID, transactionChanges.tag);
 
     const isScanning = TransactionUtils.hasReceipt(updatedTransaction) && TransactionUtils.isReceiptBeingScanned(updatedTransaction);
 
diff --git a/src/libs/actions/Policy.js b/src/libs/actions/Policy.js
index bcc371b3a609..659fc96db468 100644
--- a/src/libs/actions/Policy.js
+++ b/src/libs/actions/Policy.js
@@ -91,6 +91,27 @@ Onyx.connect({
     callback: (val) => (allRecentlyUsedCategories = val),
 });
 
+let allPolicyTags = {};
+Onyx.connect({
+    key: ONYXKEYS.COLLECTION.POLICY_TAGS,
+    waitForCollectionCallback: true,
+    callback: (value) => {
+        if (!value) {
+            allPolicyTags = {};
+            return;
+        }
+
+        allPolicyTags = value;
+    },
+});
+
+let allRecentlyUsedTags = {};
+Onyx.connect({
+    key: ONYXKEYS.COLLECTION.POLICY_RECENTLY_USED_TAGS,
+    waitForCollectionCallback: true,
+    callback: (val) => (allRecentlyUsedTags = val),
+});
+
 let networkStatus = {};
 Onyx.connect({
     key: ONYXKEYS.NETWORK,
@@ -1471,6 +1492,27 @@ function buildOptimisticPolicyRecentlyUsedCategories(policyID, category) {
     return lodashUnion([category], policyRecentlyUsedCategories);
 }
 
+/**
+ * @param {String} policyID
+ * @param {String} tag
+ * @returns {Object}
+ */
+function buildOptimisticPolicyRecentlyUsedTags(policyID, tag) {
+    if (!policyID || !tag) {
+        return {};
+    }
+
+    const policyTags = lodashGet(allPolicyTags, `${ONYXKEYS.COLLECTION.POLICY_TAGS}${policyID}`, {});
+    // For now it only uses the first tag of the policy, since multi-tags are not yet supported
+    const tagListKey = _.first(_.keys(policyTags));
+    const policyRecentlyUsedTags = lodashGet(allRecentlyUsedTags, `${ONYXKEYS.COLLECTION.POLICY_RECENTLY_USED_TAGS}${policyID}`, {});
+
+    return {
+        ...policyRecentlyUsedTags,
+        [tagListKey]: lodashUnion([tag], lodashGet(policyRecentlyUsedTags, [tagListKey], [])),
+    };
+}
+
 /**
  * This flow is used for bottom up flow converting IOU report to an expense report. When user takes this action,
  * we create a Collect type workspace when the person taking the action becomes an owner and an admin, while we
@@ -1900,6 +1942,7 @@ export {
     dismissAddedWithPrimaryLoginMessages,
     openDraftWorkspaceRequest,
     buildOptimisticPolicyRecentlyUsedCategories,
+    buildOptimisticPolicyRecentlyUsedTags,
     createDraftInitialWorkspace,
     setWorkspaceInviteMessageDraft,
 };
diff --git a/src/pages/iou/SplitBillDetailsPage.js b/src/pages/iou/SplitBillDetailsPage.js
index d1fe21d8cf4e..002dc3d48b55 100644
--- a/src/pages/iou/SplitBillDetailsPage.js
+++ b/src/pages/iou/SplitBillDetailsPage.js
@@ -101,6 +101,7 @@ function SplitBillDetailsPage(props) {
         merchant: splitMerchant,
         created: splitCreated,
         category: splitCategory,
+        tag: splitTag,
     } = isEditingSplitBill && props.draftTransaction ? ReportUtils.getTransactionDetails(props.draftTransaction) : ReportUtils.getTransactionDetails(props.transaction);
 
     const onConfirm = useCallback(
@@ -131,6 +132,7 @@ function SplitBillDetailsPage(props) {
                             iouCreated={splitCreated}
                             iouMerchant={splitMerchant}
                             iouCategory={splitCategory}
+                            iouTag={splitTag}
                             iouType={CONST.IOU.TYPE.SPLIT}
                             isReadOnly={!isEditingSplitBill}
                             shouldShowSmartScanFields
diff --git a/src/pages/iou/steps/MoneyRequestConfirmPage.js b/src/pages/iou/steps/MoneyRequestConfirmPage.js
index 29257d9201fa..44995e6ec3d8 100644
--- a/src/pages/iou/steps/MoneyRequestConfirmPage.js
+++ b/src/pages/iou/steps/MoneyRequestConfirmPage.js
@@ -234,6 +234,7 @@ function MoneyRequestConfirmPage(props) {
                     trimmedComment,
                     props.iou.currency,
                     props.iou.category,
+                    props.iou.tag,
                     reportID,
                 );
                 return;
@@ -249,6 +250,7 @@ function MoneyRequestConfirmPage(props) {
                     trimmedComment,
                     props.iou.currency,
                     props.iou.category,
+                    props.iou.tag,
                 );
                 return;
             }
@@ -272,6 +274,7 @@ function MoneyRequestConfirmPage(props) {
             props.currentUserPersonalDetails.accountID,
             props.iou.currency,
             props.iou.category,
+            props.iou.tag,
             props.iou.receiptPath,
             props.iou.receiptFilename,
             isDistanceRequest,
diff --git a/src/types/onyx/Report.ts b/src/types/onyx/Report.ts
index 75c79358e510..b49599913543 100644
--- a/src/types/onyx/Report.ts
+++ b/src/types/onyx/Report.ts
@@ -19,6 +19,9 @@ type Report = {
     /** Whether the user is not an admin of policyExpenseChat chat */
     isOwnPolicyExpenseChat?: boolean;
 
+    /** Whether the report is policyExpenseChat */
+    isPolicyExpenseChat?: boolean;
+
     /** Indicates if the report is pinned to the LHN or not */
     isPinned?: boolean;