A large not-for-profit organization expended $1,250,000 in direct lobbying during the current year. As long as the $1,250,000 did not exceed 2 percent of the organization's gross receipts, the amount is allowable according to the Internal Revenue Code.

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The Internal Revenue Code imposes limits on the amount of lobbying expenditures a not-for-profit organization can make without jeopardizing its tax-exempt status. The 2 percent figure does not apply to allowable lobbying expenditures; instead, the IRS uses a substantial part test or an expenditure test (for those electing under section 501(h)) to determine the allowable amount, which is not simply capped at 2 percent of an organization's gross receipts.

A Large Not-For-Profit Organization Expended $1,250,000 in Direct Lobbying During