42-1121. Overpayment and underpayment in different tax years

A. If an overpayment is made by a taxpayer for any taxable period and a deficiency is owing from the same taxpayer for any other taxable period, the overpayment, if the period within which credit for the overpayment may be allowed has not expired, shall be credited on the deficiency if the period within which assessment of the deficiency may be proposed has not expired, and the balance, if any, shall be credited or refunded to the taxpayer. Interest shall not be assessed on the portion of the deficiency that is extinguished by the credit or added to such portion of the overpayment as is applied against the deficiency for the period of time after the date the overpayment was made. For the purposes of this section, the returns of a decedent and his estate shall be considered returns of the same taxpayer and the returns of the decedent and his estate filed for the year of death shall be considered returns for different taxable years.

B. If the correction of an erroneous inclusion or deduction of an item in the computation of income of any year results in an overpayment of income taxes for one year and a deficiency for another year, the overpayment, if the period within which credit for the overpayment may be allowed has not expired, shall be credited on the deficiency, if the period within which the deficiency may be proposed has not expired, and the balance, if any, shall be credited or refunded and in any case described by this section no interest may be assessed on the portion of the deficiency that is extinguished by the credit or added to such portion of the overpayment as is applied against the deficiency for the period of time after the date the overpayment was made.

C. This section is not intended, nor shall it be construed, as a limitation on the department's duty to offset or recoup barred assessments against overpayments.