1. Tax. A doctrine allowing a taxpayer to offset previously overpaid taxes against current taxes due, even though the taxpayer is time-barred from claiming a refund on the previous taxes. [Cases: Internal Revenue 4829.10. C.J.S. Internal Revenue §§ 728, 738.]
2. Tax. A doctrine allowing the government to offset taxes previously uncollected from a taxpayer against the taxpayer’s current claim for a refund, even though the government is time-barred from collecting the previous taxes. • In both senses, this type of recoupment can be asserted only if the statute of limitations has created an inequitable result. See RECOUPMENT(2). [Cases: Internal Revenue 4845. C.J.S. Internal Revenue § 738.]
3. A principle that diminishes a party’s right to recover a debt to the extent that the party holds money or property of the debtor to which the party has no right. • This doctrine is ordinarily a defensive remedy going only to mitigation of damages. The doctrine is sometimes applied so that a claim for a tax refund that is barred by limitations may nonetheless be recouped against a tax claim of the government. — Also termed equitable-recoupment doctrine. See SETOFF(2); RECOUPMENT(3). [Cases: Set-off and Counterclaim
6. C.J.S. Set-off and Counterclaim §§ 2, 11.]
