Opinion ID: 2308852
Heading Depth: 1
Heading Rank: 5

Heading: Employees' Cash Purchases

Text: The Chancery Division also addressed Arbee's practice of permitting its employees to purchase furniture at wholesale prices, for cash, free of sales taxes. Those sales were never recorded on the corporate books. Instead, Resnick and Berkowitz spent the funds at their discretion. After Resnick's death, Berkowitz continued the practice until 1986. Berkowitz testified that he had used the money for company expenses. Sales records (available only for 1985 and 1986) indicated that $27,000 had been collected in cash sales to employees during those two years. In April 1988, five months after Brenner had filed suit, Berkowitz accounted for $19,450 of the $27,000 and paid the balance to Arbee. Additionally, Berkowitz paid the back unpaid sales tax on the employee cash sales. In 1990, Arbee filed an amended sales-tax return together with a check for approximately $2,300 to pay sales tax on employee sales for a portion of the taxable years 1985 to 1987. Defendants concede that that corporate conduct was improper. The Chancery Division enjoined that practice. However, the court found that the use of unreported cash funds could not have frustrated plaintiff's reasonable expectations because the practice had been started by her father, Resnick. Indeed, denying Brenner's motion for reconsideration, the court noted that for Brenner to challenge a policy that was established by [her] father was disingenuous.