NJ.com (04/19/12) John Barna
Vanna Kem, the owner of Tri State Labor Services, has entered a guilty plea in federal court on tax evasion charges. Kem paid Tri State employees more than $1million in cash wages between the first quarter of 2006 and the last quarter of 2008 but did not withhold employment taxes. She also failed to file U.S. Internal Revenue Service Form 941, in which she was required to report the wages paid to employees.
Buyers of a business generally expect sellers to be responsible for certain liabilities relating to when the seller owned its business—a concept mergers and acquisitions professionals refer to as indemnification. Indemnification is one of the most heavily negotiated, and potentially most significant, provisions of a purchase agreement, and understanding the terminology common to such agreements is essential when negotiating a deal. Attorney Paul Pincus of Ortoli Rosenstadt LLP explains what sellers are liable for, how a seller’s liability may be limited, and how buyers may seek to fund potential indemnity claims.
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