Which of the following describes the lobbying limits for a 501(c)(3) organization under section 501(h)?

The correct response provides a clear understanding of the lobbying limits for 501(c)(3) organizations that elect to use the 501(h) expenditure test. Under this provision, a 501(c)(3) organization can lobby without jeopardizing its tax-exempt status, up to specific financial limits based on its expenditures.

Specifically, organizations that choose to follow the 501(h) election can spend a percentage of their overall budget on lobbying efforts. The tiered approach allows for a maximum of 20% of the first $500,000 spent on lobbying activities. This figure is then effectively calculated over a four-year period, allowing organizations to engage in lobbying within this structured framework.

Understanding the limits allows organizations to advocate for their causes while maintaining compliance with IRS regulations. Other options do not accurately reflect the established parameters set by the IRS for lobbying expenditures under the 501(h) election.