She started as a promising child star, but nobody could have predicted how things would go from there.
LOS ANGELES – Lindsay Lohan is in hot water again, but this time it’s not with the District Attorney -- it's with the taxman.
A source close to the star tells us payments Lohan routinely receives to appear at clubs and events are being scrutinized by the IRS. Why? Lots of celebs receive appearance fees, and there's nothing wrong or illegal about it. In Lohan's case, however, the star routinely demands to be paid in cash, which it is then up to her to declare as income.
“For years Lindsay has been making money doing things like nightclub and party appearances and always requests to be paid in cash,” an insider told FOX411’s Pop Tarts column. “That’s really not that uncommon, but it’s up to her to declare it. And that’s where the problem is… This latest saga is so predictable, yet so ridiculous.”
In fact, the night she was arrested outside Club Avenue, Lohan was reportedly searching for her sister’s purse because it contained $10,000 in cash.
On Monday, it was revealed that the troubled actress had all of her ban accounts seized by the IRS because she owed in excess of $200,000. And while Lohan remains in serious trouble with the state of California, given that last week charges were filed against her for lying to police the same day she was arrested on assault charges in New York City, we’re told her IRS problems could ultimately prove to be Lohan's undoing.
The lovely and talented Carmen Electra
Comeback Chaos: 'Who would be surprised if the next headline says ‘Lindsay Lohan Dead?''
Source: Matt Lauer’s 'Today' contract not in jeopardy
Lindsay Lohan was drunk, on vodka bender when she allegedly punched woman in club, reports say
Does Lindsay Lohan owe the IRS money?
“Lindsay had a lien for unpaid taxes that she received notice on four times at least. But, now she is also under investigation for other tax related issues. To resolve this may not be as simple as paying the back taxes,” continued the source. “The problem is once the IRS has a red flag waived in front of them, it is hard to lose them, and with the recent 911 tape where she is talking about being paid in cash, she has alerted them to her.”
Given that her accounts have already been seized, it’s probable that the IRS has already thoroughly investigated the matter. We’re also told that the actress was basically “fired” by her accountants just a few weeks ago, although the reason why remains undisclosed.
“The IRS has taken a drastic step here so that she would have no time to transfer, aka launder any more money,” said Los Angeles-based custodial coach, Wendy Feldman. “It is unusual to seize accounts without notice, but they obviously had some cause.”
So where have the actress’ hard-earned dollars gone?
“She pays everyone else’s bills and lives a very lavish lifestyle that she can’t really afford,” a source tells us.
For example, earlier this year Lohan was banned by the Chateau Marmont Hotel for unpaid bills in excess of $47,000 during the six weeks she was shooting the Lifetime movie "Liz & Dick," including a mini bar tab of $3,145.07 and a cigarette bill of $686 for 47 packs of smokes.
So with Lohan’s future employment opportunities in jeopardy due to her latest stream of legal woes, coupled with possibly huge problems related to her tax returns, where does this leave the 26-year-old star?
“That fact that the IRS has filed a tax lien means that Lindsay has been on notice that she owed money, and had time to pay, yet did not. This is devastating for Lindsay in so many ways. Essentially there is now a public filing telling the world that she has not paid her taxes,” remarked California attorney Anahita Sedaghatfar. “Moreover, this lien will be reflected on her credit report, which will affect so many things. Lindsay must now enter into an agreement with the IRS to make installment payments on the taxes due and is now liable for interest and penalties as well.”
It was also revealed last week that actor Charlie Sheen donated $100,000 to Lohan to go toward her looming tax bill, but clearly that won’t enough to pay Uncle Sam's tab.
“This whole thing is a huge mess,” adds the source. “Being a celebrity means absolutely nothing to the Feds. There are no gray areas.”
A rep for Lohan did not respond to a request for comment.
Hollie McKay has been a FoxNews.com staff reporter since 2007. She has reported extensively from the Middle East on the rise and fall of terrorist groups such as ISIS in Iraq. Follow her on twitter at @holliesmckay