A prominent anti-tax organization, the Club for Growth, has thrown in the towel in a long-running legal battle with election regulators by agreeing to pay a $350,000 penalty to settle claims that the group violated contribution limits and reporting requirements as it supported and opposed candidates for federal office.

Under the proposed settlement filed in federal court yesterday, the club agreed not to contest a Federal Election Commission lawsuit that claimed that the group raised more than $9 million in contributions that exceeded federal limits on gifts to political action committees. In a lawsuit filed in 2005, the commission charged that the club’s solicitations made clear that its major purpose was to elect and defeat candidates. When the case was filed, the club’s president, Patrick Toomey, called the case “outrageous” and promised a principled fight. “The Club will vigorously defend the rights of our members, and all Americans, to organize and speak out about our government’s policies,” he said.

A spokesman for the club, David Keating, said yesterday that the commission’s recent settlement offer was similar to a proposal the club made in 2005 to settle the case. He said leaders of the group decided that technical problems with the lawsuit made it an imperfect vehicle to challenge the commission’s regulation of donations to advocacy groups. “The board sat down and looked at this on a dispassionate basis,” he added.

Leaders of the club recently started a so-called 501(c)(4) organization that will handle issue advocacy, while a political action committee makes expenditures on campaigns.