When the IRS determines to put your case in Hardship Status, few persons know how and why these cases come back out to the field or back into the IRS collection system. Having been a former IRS Agent, I had placed hundreds of cases in the currently non collectible status, known to the IRS Agent as Status 53 because of the form number.
Tax Cases come back out to the ASC Unit or the Field Office because of only three reasons:
1. Because the Revenue Officer working the case places a mandatory follow-up date on the file. Each Revenue Officer is different. They get a feel for the case based on the financial statement and the asset check that was made during the course of the investigation. Sometimes it is a hunch, other times you get a feel that income may increase at a given time. This mandatory follow-up date is strictly up to the reviewing Revenue Officer.
2. A certain closing code is placed on the case. If the Revenue Officer does not mandate a certain follow-up date, a closing code is put on the case. For example, let’s say the closing code is 40. What that means is when the taxpayer reaches $40,000 in a AGI (adjusted gross income), the case will trigger back to the field. Once again, each Revenue Officer makes their own decision.
3. The statute is about to expire. Certain cases will trigger because the ten year statute of limitation is about to expire. These cases usually come out 1 year before the 10 year statute. These are usually large dollar cases.
The only other way a case may come back to the field is because a Congressional inquiry was made.