Xinhua said an investigation by Chinese tax authorities found Fan had split her contract to evade taxes of 7.3 million yuan ($1.1 million) over payments for her role in "Air Strike", a film due to be released this year.
While the host later retracted the accusation and Fan denied any wrongdoing, her subsequent silence resonated far louder, igniting rampant speculation aboutwhat had become of one of China's most recognizable people.
French music composer and member of the Feature Film jury Gabriel Yared (L) and Chinese actress and member of the Feature Film jury Fan Bingbing arrive on May 28, 2017 for the closing ceremony of the 70th edition of the Cannes Film Festival in Cannes, southern France. "Without the good policies of the Communist Party and the state, without the love of the people, there is no Fan Bingbing".
The tax bureau in the eastern coastal province of Jiangsu delivered its judgment to Ms Fan on Sunday, levying fines of more than 596 million yuan for tax evasion and assessing overdue taxes of more than 288 million yuan, Xinhua said.
"I'm ashamed of my behavior and I apologize here to everyone", Fan wrote.
The report gave no indication as to Fan's whereabouts but indicated her agent was being held by police for allegedly obstructing the investigation. She admitted in the letter that she had split contracts to avoid paying tax, and promised to pay the back taxes and the fines, in accordance with the tax authorities' order.
Fan Bingbing has been fined around 883million yuan (£98.9million) for tax evasion.
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However, Fan - who earned around £33million last year - previously denied any wrongdoing.
"I know I've let down the country, betrayed society's trust in me, and let down my fans". "I have failed my nurturing country. I beg for everyone's forgiveness!"
In September, she came in last out of a hundred stars ranked in a state-sanctioned study on the social responsibility of Chinese, Taiwanese and Hong Kong celebrities.
The 36-year-old actress, model and producer had been a ubiquitous household name in China for years and tasted Hollywood success with a role in the 2014 blockbuster "X-Men: Days of Future Past".
Following the investigation into Fan, authorities have declared a wider crackdown on the entertainment industry, Xinhua said.