Arlington, Va.—New Years is rapidly approaching, and with it come sweeping new regulations that could force tens of thousands of Americans out of work. Despite a federal lawsuit filed in March by three independent tax preparers and the Institute for Justice (IJ), the IRS remains committed to implementing an unprecedented licensing scheme. The new regulations benefit powerful industry insiders and burden some 350,000 independent tax-return preparers, ultimately harming 85 million taxpayers.

“This is an unlawful power grab by one of the most powerful federal agencies,” said Attorney Dan Alban of the Institute for Justice, who represents the tax preparers challenging the regulations. “We need a court ruling that strikes down this sweeping new IRS licensing scheme.”

Unless the judge intervenes, on December 31, 2012, all tax-return preparers who aren’t attorneys, CPAs or enrolled agents must have completed 15 hours of continuing education in order to be eligible to prepare tax returns in 2013. Compliance would waste an estimated five million man hours.

“This new requirement will cause an exodus of tax preparers who will stop practicing rather than take the test and complete annual education,” said Chuck McCabe, chief executive of The Income Tax School, in an Accounting Today article titled Tax Preparer Shortage on the Way. “The result will be a shortage of qualified tax preparers and, consequently, a bidding war. A high percentage of the industry’s most experienced tax preparers are elderly and rather than take the exam, many will retire.” McCabe expects this shortage to drive up the price Americans pay for tax preparation.

The IRS filed its final brief in Loving v IRS earlier this week, so the case is now ready for a decision. IJ’s lawsuit is receiving significant national coverage from outlets including The Atlantic, Bloomberg, CNBC’s Kudlow Report, The Wall Street Journal and USA Today. The Economist noted that these new IRS regulations “threaten to crush . . . small, local” tax preparers and are “likely to push mom and pop into another line of work.”

The new regulations force tax preparers to get IRS permission before they can work. Unsurprisingly, big tax preparation firms, such as H&R Block and Jackson Hewitt, support the licensing scheme.As The Wall Street Journal explained: “Cheering the new regulations are big tax preparers like H&R Block, who are only too happy to see the feds swoop in to put their mom-and-pop seasonal competitors out of business.”