The RIRA gang told Freddie that even if he handed over the cash they still wanted €2,000 a week in a 'drugs tax'.
But Thompson said he would not pay up -- putting himself on the terror group's hitlist.
Thompson is just one of dozens of "criminals as well as legitimate business people" being targeted by the Real IRA -- led by two notorious brothers from the city's northside.
"Gardai are aware that Thompson has been approached by an associate of the brothers," revealed a security source.
"They demanded 12 grand up front and told him he would then have to pay €2,000 a week in protection if he wants to stay in Ireland," the source added.
"Freddie told them to 'F**k off', that he won't pay them a cent. This could have very serious implications for him because they do have the capability to have him killed."
Thompson, who returned to Dublin last week after the fire attack on his mother's south inner city home, was approached by dissidents demanding cash from him on a visit to the capital last month, sources told the Herald.
Gardai do not believe that the firebomb attack is linked to the RIRA demand and instead suspect that a local row between Thompson and other criminals led to the incident.
Thompson continues to stay at his mother's house where he was visited by a number of the capital's senior criminals, including a convicted heroin dealer.
The Herald understands that Thompson is just one of a number of major criminals being targeted by cash hungry Real IRA gangsters.
Well known criminal Paul Rice (41), from Tallaght, has decided to leave Ireland for Spain's Costa-Del-Crime after being approached last month by Real IRA men demanding cash.
Rice was jailed for ten years in July 1995, after he pleaded guilty to the armed robbery of a bank in which shots were fired.
Rice escaped the scene on horseback after the incident in which shots were discharged and a security guard was kicked and beaten on the head with a lump hammer.