My wife works at a facility where the business at hand has changed, the previous owner did not pay the final pay to the employees, citing that he did not take out taxes from employees when he paid them on a bi-weekly basis, so as the business was sold, the previous owner told his former employees that they owe him money and is withholding all of the paychecks. Resulting in no one getting paid and waiting for the new owners to pay them when the new payroll takes effect.

Ok, that's very confusing, but let's take the last question first. In the majority of acquisitions, the new owner assumes the outstanding liabilities of the old owner. Your wife can file a claim against the new owner (to start with) for the unpaid wages; and if the old owner cannot be found, that's probably the only chance she has. Unfortunately, the ICA website advises that it could be as much as six months to come to a resolution. :eek:

Now, taxes? If I'm understanding you correctly, the old company was not withholding taxes from the paychecks (in violation of IRS and state law) and they should have been. So, the old owner told the employees that, because he didn't do that, they would owe him the money that should have been withheld? And because that amount is presumably more than their final pay, that's why he didn't issue paychecks? Is that correct?