diff --git a/src/libs/actions/IOU/index.ts b/src/libs/actions/IOU/index.ts
index b244c1acf5afb..74ad40428c30f 100644
--- a/src/libs/actions/IOU/index.ts
+++ b/src/libs/actions/IOU/index.ts
@@ -11560,7 +11560,12 @@ function payInvoice({
     API.write(WRITE_COMMANDS.PAY_INVOICE, params, onyxData);
 }
 
-function detachReceipt(transactionID: string | undefined, transactionPolicy: OnyxEntry<OnyxTypes.Policy>, transactionPolicyCategories?: OnyxEntry<OnyxTypes.PolicyCategories>) {
+function detachReceipt(
+    transactionID: string | undefined,
+    transactionPolicy: OnyxEntry<OnyxTypes.Policy>,
+    transactionPolicyTagList: OnyxEntry<OnyxTypes.PolicyTagLists>,
+    transactionPolicyCategories?: OnyxEntry<OnyxTypes.PolicyCategories>,
+) {
     if (!transactionID) {
         return;
     }
@@ -11616,17 +11621,14 @@ function detachReceipt(transactionID: string | undefined, transactionPolicy: Ony
     ];
 
     if (transactionPolicy && isPaidGroupPolicy(transactionPolicy) && newTransaction) {
-        // TODO: Replace getPolicyTagsData (https://github.com/Expensify/App/issues/72721) and getPolicyRecentlyUsedTagsData (https://github.com/Expensify/App/issues/71491) with useOnyx hook
-        // eslint-disable-next-line @typescript-eslint/no-deprecated
-        const policyTagList = getPolicyTagsData(transactionPolicy.id);
         const currentTransactionViolations = allTransactionViolations[`${ONYXKEYS.COLLECTION.TRANSACTION_VIOLATIONS}${transactionID}`] ?? [];
         const violationsOnyxData = ViolationsUtils.getViolationsOnyxData(
             newTransaction,
             currentTransactionViolations,
             transactionPolicy,
-            policyTagList ?? {},
+            transactionPolicyTagList ?? {},
             transactionPolicyCategories ?? {},
-            hasDependentTags(transactionPolicy, policyTagList ?? {}),
+            hasDependentTags(transactionPolicy, transactionPolicyTagList ?? {}),
             isInvoiceReportReportUtils(expenseReport),
         );
         optimisticData.push(violationsOnyxData);
diff --git a/src/pages/media/AttachmentModalScreen/routes/TransactionReceiptModalContent.tsx b/src/pages/media/AttachmentModalScreen/routes/TransactionReceiptModalContent.tsx
index 4b96afbce989a..1759ee10c2545 100644
--- a/src/pages/media/AttachmentModalScreen/routes/TransactionReceiptModalContent.tsx
+++ b/src/pages/media/AttachmentModalScreen/routes/TransactionReceiptModalContent.tsx
@@ -74,6 +74,8 @@ function TransactionReceiptModalContent({navigation, route}: AttachmentModalScre
     // If we have a merge transaction, we need to use the receipt from the merge transaction
     const [mergeTransaction] = useOnyx(`${ONYXKEYS.COLLECTION.MERGE_TRANSACTION}${getNonEmptyStringOnyxID(mergeTransactionID)}`);
 
+    const [policyTagList] = useOnyx(`${ONYXKEYS.COLLECTION.POLICY_TAGS}${policy?.id}`);
+
     const isDraftTransaction = !!action;
     const draftTransactionID = isDraftTransaction ? transactionID : undefined;
 
@@ -255,9 +257,9 @@ function TransactionReceiptModalContent({navigation, route}: AttachmentModalScre
      * Detach the receipt and close the modal.
      */
     const deleteReceiptAndClose = useCallback(() => {
-        detachReceipt(transaction?.transactionID, policy, policyCategories);
+        detachReceipt(transaction?.transactionID, policy, policyTagList, policyCategories);
         navigation.goBack();
-    }, [navigation, transaction?.transactionID, policy, policyCategories]);
+    }, [navigation, transaction?.transactionID, policy, policyCategories, policyTagList]);
 
     /**
      * Remove odometer image and close the modal.
diff --git a/tests/actions/IOUTest.ts b/tests/actions/IOUTest.ts
index c0c5ac5f222ca..aaf205536f176 100644
--- a/tests/actions/IOUTest.ts
+++ b/tests/actions/IOUTest.ts
@@ -23,6 +23,7 @@ import {
     convertBulkTrackedExpensesToIOU,
     createDistanceRequest,
     deleteMoneyRequest,
+    detachReceipt,
     getDeleteTrackExpenseInformation,
     getIOUReportActionWithBadge,
     getReportOriginalCreationTimestamp,
@@ -130,6 +131,7 @@ import currencyList from '../unit/currencyList.json';
 import createPersonalDetails from '../utils/collections/personalDetails';
 import createRandomPolicy, {createCategoryTaxExpenseRules} from '../utils/collections/policies';
 import createRandomPolicyCategories from '../utils/collections/policyCategory';
+import createRandomPolicyTags from '../utils/collections/policyTags';
 import createRandomReportAction from '../utils/collections/reportActions';
 import {createRandomReport} from '../utils/collections/reports';
 import createRandomTransaction from '../utils/collections/transaction';
@@ -17599,4 +17601,117 @@ describe('actions/IOU', () => {
             expect(updatedTransaction?.comment?.odometerEndImage).toBeUndefined();
         });
     });
+
+    describe('detachReceipt', () => {
+        const transactionID = '1';
+        const reportID = '2';
+        const policyID = '3';
+        const tagListName = 'Department';
+
+        const policy = {
+            ...createRandomPolicy(1, CONST.POLICY.TYPE.TEAM),
+            id: policyID,
+        };
+
+        const policyTagList = createRandomPolicyTags(tagListName, 3);
+
+        const transaction = {
+            ...createRandomTransaction(1),
+            transactionID,
+            reportID,
+            receipt: {source: 'receipt-url.jpg'},
+            merchant: 'Test Merchant',
+        };
+
+        const report = {
+            ...createRandomReport(1, undefined),
+            reportID,
+            policyID,
+            type: CONST.REPORT.TYPE.EXPENSE,
+            lastVisibleActionCreated: '2024-01-01 00:00:00',
+            lastReadTime: '2024-01-01 00:00:00',
+        };
+
+        const seedOnyx = async () => {
+            await Onyx.set(`${ONYXKEYS.COLLECTION.TRANSACTION}${transactionID}`, transaction);
+            await Onyx.set(`${ONYXKEYS.COLLECTION.REPORT}${reportID}`, report);
+            await Onyx.set(`${ONYXKEYS.COLLECTION.POLICY}${policyID}`, policy);
+            await Onyx.set(`${ONYXKEYS.COLLECTION.POLICY_TAGS}${policyID}`, policyTagList);
+            await waitForBatchedUpdates();
+        };
+
+        it('should do nothing when transactionID is undefined', async () => {
+            const transactionsBefore = await getOnyxValue(ONYXKEYS.COLLECTION.TRANSACTION);
+
+            detachReceipt(undefined, undefined, undefined, undefined);
+            await waitForBatchedUpdates();
+
+            const transactionsAfter = await getOnyxValue(ONYXKEYS.COLLECTION.TRANSACTION);
+            expect(transactionsAfter).toEqual(transactionsBefore);
+        });
+
+        it('should optimistically null the receipt and set pending field', async () => {
+            // eslint-disable-next-line rulesdir/no-multiple-api-calls
+            const writeSpy = jest.spyOn(API, 'write').mockImplementation(jest.fn());
+            await seedOnyx();
+
+            try {
+                detachReceipt(transactionID, undefined, undefined, undefined);
+                await waitForBatchedUpdates();
+
+                const onyxData = writeSpy.mock.calls.at(0)?.at(2) as {optimisticData?: Array<{key: string; value: unknown}>};
+                const transactionOptimistic = onyxData?.optimisticData?.find((update) => update.key === `${ONYXKEYS.COLLECTION.TRANSACTION}${transactionID}`);
+                expect(transactionOptimistic?.value).toEqual(
+                    expect.objectContaining({
+                        receipt: null,
+                        pendingFields: {receipt: CONST.RED_BRICK_ROAD_PENDING_ACTION.UPDATE},
+                    }),
+                );
+            } finally {
+                writeSpy.mockRestore();
+            }
+        });
+
+        it('should create an optimistic report action and update report timestamps', async () => {
+            await seedOnyx();
+
+            detachReceipt(transactionID, undefined, undefined, undefined);
+            await waitForBatchedUpdates();
+
+            // Then a new report action should be created on the report
+            const reportActions = await getOnyxValue(`${ONYXKEYS.COLLECTION.REPORT_ACTIONS}${reportID}`);
+            const actions = Object.values(reportActions ?? {});
+            expect(actions.length).toBeGreaterThan(0);
+
+            // And the report timestamps should be updated
+            const updatedReport = await getOnyxValue(`${ONYXKEYS.COLLECTION.REPORT}${reportID}`);
+            expect(updatedReport?.lastVisibleActionCreated).not.toBe('2024-01-01 00:00:00');
+        });
+
+        it('should call API.write with DETACH_RECEIPT command and correct params', async () => {
+            // eslint-disable-next-line rulesdir/no-multiple-api-calls
+            const writeSpy = jest.spyOn(API, 'write').mockImplementation(jest.fn());
+            await seedOnyx();
+
+            try {
+                detachReceipt(transactionID, undefined, undefined, undefined);
+                await waitForBatchedUpdates();
+
+                expect(writeSpy).toHaveBeenCalledWith(WRITE_COMMANDS.DETACH_RECEIPT, expect.objectContaining({transactionID}), expect.anything(), expect.anything());
+            } finally {
+                writeSpy.mockRestore();
+            }
+        });
+
+        it('should compute violations when policy is paid group', async () => {
+            await seedOnyx();
+
+            detachReceipt(transactionID, policy, policyTagList, undefined);
+            await waitForBatchedUpdates();
+
+            const violations = await getOnyxValue(`${ONYXKEYS.COLLECTION.TRANSACTION_VIOLATIONS}${transactionID}`);
+            expect(violations).toBeDefined();
+            expect(Array.isArray(violations)).toBe(true);
+        });
+    });
 });