Court holds director personally liable for unpaid taxes

United States of America v. Isaac M. Neuberger, (United States District Court for the District of Maryland 2025)

A corporate director who controls an insolvent company and pays other creditors before the United States is personally liable for the unpaid federal tax debt under 31 U.S.C. §3713(b).

Holding

The District of Maryland held that attorney and sole director Isaac M. Neuberger was personally liable under the Federal Priority Statute for Lehcim Holdings Inc.’s unpaid federal income tax liabilities.

While Lehcim was insolvent, the court found that Neuberger directed and approved transfers of more than $8.8 million to related entities rather than satisfying the IRS debt, satisfying each element of §3713(b) representative liability.

Why It Matters

• Confirms that corporate officers and directors can be personally liable when they divert corporate assets of an insolvent taxpayer before satisfying a federal tax debt.

• Clarifies that the Federal Priority Statute—not the Federal Tax Lien Act—governs when a company’s assets are transferred before paying the United States.

• Demonstrates that repayment of rela…