The taxman is seeking 112 million euros from Italian motorcycling ace Valentino Rossi, tax office sources said on Thursday.
It emerged on Wednesday that the tax office was investigating Rossi over possible undeclared earnings of 60 million euros for the period 2000-2004.
Sources said the agency suspected 28-year-old Rossi of dodging 43.7 million euros owed in personal income taxes, business taxes and VAT payments for that period.
They said fines and interest on the amount took the overall sum sought to 112 million.
The seven-time world champion could also face criminal proceedings for alleged tax evasion after tax inspectors reported the sportsman to the public prosecutor's office in the northeast city of Pesaro on Thursday.
The tax office investigation is linked to Rossi's decision to take up British residency in 2000.
Rossi's London residency has enabled him to take advantage of favourable tax conditions, such as only declaring earnings made in Britain and avoiding taxes on his lucrative merchandising and sponsorship contracts, according to the tax office.
Rossi issued a statement on Wednesday evening saying that "the tax office is rightly doing its job but I believe these matters should be dealt with in the appropriate place. Nonetheless, my consultants are already examining the issue".
"Everybody in the world knows I have been living in London, an extraordinary city, since 2000. Obviously, I come back to Italy to see my family and friends and take my holidays," he added.
"NEXT I'LL BE AN ASTRONAUT ON MARS".
Rossi also accused the press of hounding him over the past two weeks, saying he was "astonished at the superficiality" with which it had invented certain stories.
He referred to press speculation that he was having a relationship with a top Italian showgirl and had been spotted "walking naked on a beach with her".
"Now I learn that I am the object of a mega tax probe. Perhaps tomorrow I'll find out I'm an astronaut on Mars," Rossi quipped.
Rossi is currently believed to be staying at his hometown of Tavullia near Pesaro.
The sportsman's mother, Stefania Palma, told reporters from her home in Tavullia on Thursday that "the law is the law and must be respected. I believe Valentino's actions have been lawful".
"If he's done certain things, then I think they must have been within the law. In England, where all the sportspeople are going, it must be legal... He's been living in London for such a long time, so why is the tax office only bringing this up now?" she said.
The tax office stressed on Wednesday that Rossi had "residency in London but is not domiciled there".
It noted that in 2002, Rossi's Italian tax form declared earnings of 500 euros.
Rossi's sponsorship contracts were all reported to be made out to foreign companies but tax inspectors suspect that the racer's business affairs and interests are mainly based in Italy.
The Yamaha rider was probed for suspected tax evasion in 2002 but no evidence of wrongdoing was found and the case was shelved.
Junior Economy Minister Vincenzo Visco, who is spearheading a government crackdown on chronic levels of tax evasion in Italy, commented: "I'm a great fan of Rossi and I'm sorry about this, but the law is the law".
"A singular situation has been created in which it is enough, on the basis of British law, to create a more or less fictitious residency in London in order to avoid paying taxes in one's own country," he said.
Visco said he would challenge these British tax rules through the European Union, arguing that such a loophole went "beyond the norms of competition between EU states".
Rossi bagged five premier motorcycling titles in a row from 2001-2005.
In 2006, he lost out to America's Nicky Hayden while this year, he is second in the standings behind Australia's Casey Stoner with seven races to go.
Rossi is one of the world's highest paid sportsmen.
Last year, he was reported to have earned 12 million euros from his Yamaha contract and 25 million from sponsorship and merchandising deals.
