A. 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 for such year by such 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. No interest shall be assessed on such portion of the deficiency as is extinguished by the credit for the period of time subsequent to 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 grantor or a trust, beneficiary of an estate or trust, a child, or spouse of such child, or a spouse for any year results in an overpayment for such year by such grantor, beneficiary, child or spouse, and also results in a deficiency for the same year for such 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. No interest shall be assessed on such portion of the deficiency as is extinguished by the credit for the period of time subsequent to the date the overpayment was made.

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