Arizona Revised Statutes § 42-1120 Overpayment And Underpayment; Spouses; Trusts And Estates

42-1120. Overpayment and underpayment; spouses; trusts and estates

A. If an overpayment is made by a taxpayer for any taxable period and a deficiency is owing from the spouse of the taxpayer for the same period and both the taxpayer and the spouse notify the department in writing before the expiration of the time within which credit for the overpayment may be allowed that the overpayment may be credited against the deficiency, interest shall not be assessed on such portion of the deficiency as 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.

B. If the correction of an erroneous inclusion or deduction of an item or items in the computation of income of a trust, estate or individual for any year results in an overpayment of income tax for such year by the trust, estate or individual and also results in a deficiency for the same year for a grantor of such trust or beneficiary of such estate or trust or spouse or child of such individual or spouse of such child, 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. Interest shall not be assessed on such portion of the deficiency as is extinguished by the credit for the period of time after the date the overpayment was made.

C. If the correction of an erroneous inclusion or deduction of an item or items in the computation of income of a grantor of a trust, beneficiary of an estate or trust, a child or spouse of a child, or a spouse for any year results in an overpayment of income taxes for such year by the grantor, beneficiary, child or spouse, and also results in a deficiency for the same year for the trust, estate or individual, 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. Interest shall not be assessed on the portion of the deficiency as 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.

D. 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.

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Last modified: October 13, 2016