---
title: "A Limit On The IRS’s Prerogative To Change Its Mind: Reliance On A Prior No-Change Letter As A Defense To Penalties"
description: By Megan L. Brackney Journal of Passthrough Entities May-June 2016 Edition It is the IRS’s prerogative…
---

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# [A Limit On The IRS’s Prerogative To Change Its Mind: Reliance On A Prior No-Change Letter As A Defense To Penalties](https://kostelanetz.com/publications/a-limit-on-the-irss-prerogative-to-change-its-mind-reliance-on-a-prior-no-change-letter-as-a-defense-to-penalties)

 Written by [Kostelanetz LLP](https://kostelanetz.com/publications/author/kostelanetz-llp) | May 1, 2016

By [Megan L. Brackney  
](https://www.kflaw.com/megan_l_brackney)Journal of Passthrough Entities  
 May-June 2016 Edition

It is the IRS’s prerogative to change its mind. The IRS can conclude the audit of one tax year with no change and then make adjustments in a later tax year on the exact same tax positions present in the prior audit. But, can the IRS approve of a tax reporting position in one year and then turn around and assess penalties on the ground that the taxpayer was negligent for having taken that position in a later year? Two recent decisions consider when the result in a prior audit is a reasonable cause defense to penalties: *Brinks Gilson & Lione* and *J.J. Powell, Inc.* This column discusses both cases and then provides some tips for successfully defending against penalties based on a favorable result in a prior audit.

[…]

[Full article](https://kflaw.com/wp-content/uploads/2022/08/Tax-Controversy-Corner_-A-Limit-on-the-...pdf)

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