Low-Income Tax Clinic Modernization Act
Bill: H.R.9677 | Sponsor: Rep. Davis, Danny K. (D-IL)
Policy area: Taxation

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.

To increase the aggregate limitation on grants to low-income taxpayer 
                    clinics, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Low-Income Tax Clinic Modernization 
Act''.

SEC. 2. LOW-INCOME TAXPAYER CLINICS.

    (a) Qualified Low-Income Taxpayer Clinic.--Section 7526(b)(1) of 
the Internal Revenue Code of 1986 is amended--
            (1) in subparagraph (A)(ii)--
                    (A) in subclause (I), by striking ``or'' at the 
                end,
                    (B) in subclause (II), by striking the period at 
                the end and inserting ``; or'', and
                    (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)'' 
        after ``250 percent''.
    (b) Limitations.--Section 7526(c) of the Internal Revenue Code of 
1986 is amended--
            (1) in paragraph (1), by striking ``$6,000,000'' and 
        inserting ``$20,000,000'',
            (2) in paragraph (2), by striking ``$100,000'' and 
        inserting ``$500,000'', and
            (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' for `2016' in 
                        subparagraph (A)(ii) thereof.
                    ``(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) of the 
Internal Revenue Code of 1986 is amended to read as follows:
            ``(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' may 
                        include--
                                    ``(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' shall not 
                        include any indirect expenses, such as general 
                        overhead of the institution sponsoring the low-
                        income taxpayer clinic.
                    ``(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.
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