The estate of a Florida man who died in 2000 has launched a petition against an IRS demand, after the US tax authority said it was due about $2.2 million in taxes and penalties because of a Bermuda trust.

The news that the estate was petitioning to overturn the demand was revealed on Friday in the Palm Beach Post.

The newspaper reported that the estate of orthodontist L. Thomas LaSalle is arguing that the IRS erred when it ruled that Mr. LaSalle, who had three Florida practices, retained control and the income from a trust he established in Bermuda, which held stock in a Florida bank.

?He never owned the stock,? William Jay Palmer, a Miami tax attorney for the estate, told the Palm Beach Post. ?It was owned by his trust. They?re trying to include the trust in the estate (value), and we?re saying it?s not includable.?

According to the petition, Mr. LaSalle established the LaSalle Indenture of Settlement trust in Bermuda in 1970, five years before he and his wife married. The petition argued that neither Mr. LaSalle nor his wife served as a trustee of the trust and that they did not receive income from it.

Butterfield Bank was reportedly trustee for the trust. The nature of the assets was reportedly not disclosed in the petition.

Besides $1.26 million in additional taxes, the IRS ordered the estate to pay $949,074 in civil tax fraud penalties. The IRS reportedly has 60 days to answer the December 21 petition. If the IRS and estate fail to negotiate a settlement, the case could go to trial before a tax court judge.