Low-Income Tax Clinic Modernization Act

To increase the aggregate limitation on grants to low-income taxpayer clinics, and for other purposes. 1. Short title This Act may be cited as the Low-Income Tax Clinic Modernization Act 2. Low-income taxpayer clinics (a) Qualified low-Income taxpayer clinic Section 7526(b)(1) (1) in subparagraph (A)(ii)— (A) in subclause (I), by striking or (B) in subclause (II), by striking the period at the end and inserting ; or (C) by adding at the end the following: (III) operates a program to provide technical advice and litigation support to programs described in subclauses (I) and (II). , and (2) in subparagraph (B)(i), by inserting (or such other percentage, not to exceed 400 percent, as established by the Secretary with respect to such clinic, provided that the Secretary has determined that such percentage will increase the ability of the clinic to represent additional taxpayers) 250 percent (b) Limitations Section 7526(c) (1) in paragraph (1), by striking $6,000,000 $20,000,000 (2) in paragraph (2), by striking $100,000 $500,000 (3) by adding at the end the following: (7) Limitation on use of grants for overhead and administration With respect to any costs incurred by the institution sponsoring the low-income taxpayer clinic for general overhead and program administration, such costs shall not exceed 10 percent of the amount of any grant provided under this section with respect to such clinic. (8) Adjustment for inflation (A) In general In the case of any calendar year beginning after 2023, the dollar amounts in paragraphs (1) and (2) shall each be increased by an amount equal to— (i) such dollar amount, multiplied by (ii) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting 2022 2016 (B) Rounding (i) Aggregate limitation With respect to the dollar amount in paragraph (1), if such amount, as increased under subparagraph (A), is not a multiple of $500,000, such amount shall be rounded to the nearest multiple of $500,000. (ii) Limitation on annual grants to a clinic With respect to the dollar amount in paragraph (2), if such amount, as increased under subparagraph (A), is not a multiple of $5,000, such amount shall be rounded to the nearest multiple of $5,000. . (c) Matching funds Paragraph (5) of section 7526(c) (5) Requirement of matching funds (A) In general Except as provided under subparagraph (B), with respect to any grant provided to a low-income taxpayer clinic under this section, such clinic shall provide matching funds equal to the applicable percentage of the amount of such grant. (B) Exception The requirement under subparagraph (A) shall not apply to any low-income taxpayer clinic during its first 2 years of operation. (C) Matching funds (i) In general For purposes of this paragraph, the term matching funds (I) the salary (including fringe benefits) of individuals performing services for the low-income taxpayer clinic, and (II) the cost of equipment used in the low-income taxpayer clinic. (ii) Exclusion For purposes of this paragraph, the term matching funds (D) Applicable percentage For purposes of subparagraph (A), the applicable percentage shall be 100 percent, except that the Secretary may establish a lower percentage (not below 50 percent) if the Secretary determines that such percentage would expand the coverage of the low-income taxpayer clinic to additional taxpayers. . (d) Effective date The amendments made by this section shall apply to calendar years beginning after the date of enactment of this Act.

Summary: Low-Income Tax Clinic Modernization Act This bill modifies provisions relating to clinics that provide free representation to low-income taxpayers in tax controversies before the Internal Revenue Service (IRS). It expands the definition of low-income taxpayer clinics to require clinics to provide technical advice and litigation support for its programs. The bill also increases the aggregate amount that the IRS may allocate for grants to such clinics and the annual amount of such grants.