§ 78. Limitations on credit or refund. 1. General.--Claim for credit
or refund of an overpayment of tax under any of the named parts shall be
filed by the taxpayer within three years from the time the return was
filed or two years from the time the tax was paid, whichever of such
periods expires the later, or if no return was filed, within two years
from the time the tax was paid. If the claim is filed within the three
year period, the amount of the credit or refund shall not exceed the
portion of the tax paid within the three years immediately preceding the
filing of the claim plus the period of any extension of time for filing
the return. If the claim is not filed within the three year period, but
is filed within the two year period, the amount of the credit or refund
shall not exceed the portion of the tax paid during the two years
immediately preceding the filing of the claim. Except as otherwise
provided in this section, if no claim is filed, the amount of a credit
or refund shall not exceed the amount which would be allowable if a
claim had been filed on the date the credit or refund is allowed. For
special restriction in a proceeding on a claim for refund of tax paid
pursuant to an assessment made as a result of (a) a net operating loss
carryback, or (b) an increase or decrease in federal taxable income or
federal tax, or (c) a federal change or correction or renegotiation, or
computation or recomputation of tax, which is treated in the same manner
as if it were a deficiency for federal income tax purposes, see
paragraph (g) of subdivision three of section seventy-four.

2. Extension of time by agreement.--If an agreement under the
provisions of paragraph (b) of subdivision three of section seventy-four
(extending the period for assessment of tax) is made within the period
prescribed in subdivision one for the filing of a claim for credit or
refund, the period for filing a claim for credit or refund, or for
making credit or refund if no claim is filed, shall not expire prior to
six months after the expiration of the period within which an assessment
may be made pursuant to the agreement or any extension thereof. The
amount of such credit or refund shall not exceed the portion of the tax
paid after the execution of the agreement and before the filing of the
claim or the making of the credit or refund, as the case may be, plus
the portion of the tax paid within the period which would be applicable
under subdivision one if a claim had been filed on the date the
agreement was executed.

3. Notice of change or correction of fedearl income.--If a taxpayer is
required by part two or part three of this title to file a report or
amended return in respect of (a) a decrease or increase in federal
taxable income or federal tax, or (b) a federal change or correction or
renegotiation, or computation or recomputation of tax, which is treated
in the same manner as if it were an overpayment for federal income tax
purposes, claim for credit or refund of any resulting overpayment of tax
shall be filed by the taxpayer within two years from the time such
report or amended return was required to be filed with the commissioner
of finance. If the report or amended return required by part two or part
three of this title is not filed within the ninety day period therein
specified, interest on any resulting refund or credit shall cease to
accrue after such ninetieth day. The amount of such credit or refund--

(c) shall be computed without change of the allocation of income or
capital upon which the taxpayer's return (or any additional assessment)
was based, and

(d) shall not exceed the amount of the reduction in tax attributable
to such decrease or increase in federal taxable income or federal tax or
to such federal change or correction or renegotiation, or computation or
recomputation of tax.

This subdivision shall not affect the time within which or the amount
for which a claim for credit or refund may be filed apart from this
subdivision.

4. Overpayment attributable to net operating loss carryback.--A claim
for credit or refund of so much of an overpayment under part two of this
title as is attributable to the application to the taxpayer of a net
operating loss carryback shall be filed within three years from the time
the return was due for the taxable year of the loss, or within the
period prescribed in subdivision two in respect of such taxable year, or
within the period prescribed in subdivision three, where applicable, in
respect of the taxable year to which the net operating loss is carried
back, whichever expires the latest. Where such claim for credit or
refund is filed after the expiration of the period prescribed in
subdivision one or in subdivision two where applicable, in respect of
the taxable year to which the net operating loss is carried back, the
amount of such credit or refund shall be computed without change of the
allocation of income or capital upon which the taxpayer's return (or any
additional assessment) was based.

5. Failure to file claim within prescribed period.--No credit or
refund shall be allowed or made, except as provided in subdivision six
of this section or subdivision four of section eighty-one, after the
expiration of the applicable period of limitation specified in this
part, unless a claim for credit or refund is filed by the taxpayer
within such period. Any later credit shall be void and any later refund
erroneous. No period of limitations specified in any other law shall
apply to the recovery by a taxpayer of moneys paid in respect of taxes
under the named parts.

6. Effect of petition to director of finance.--If a notice of
deficiency for a taxable year has been mailed to the taxpayer under
section seventy-two and if the taxpayer files a timely petition with the
director of finance under section eighty, he may determine that the
taxpayer has made an overpayment for such year (whether or not he also
determines a deficiency for such year). No separate claim for credit or
refund for such year shall be filed, and no credit or refund for such
year shall be allowed or made, except--

(a) as to overpayment determined by a decision of the director of
finance which has become final; and

(b) as to any amount collected in excess of an amount computed in
accordance with the decision of the director of finance which has become
final; and

(c) as to any amount collected after the period of limitation upon the
making of levy for collection has expired; and

(d) as to any amount claimed as a result of a change or correction
described in subdivision three.

7. Limit on amount of credit or refund.--The amount of overpayment
determined under subdivision six shall, when the decision of the
director of finance has become final, be credited or refunded in
accordance with subdivision one of section seventy-seven and shall not
exceed the amount of tax which the director of finance determines as
part of his decision was paid--

(a) after the mailing of the notice of deficiency, or

(b) within the period which would be applicable under subdivisions
one, two or three, if on the date of the mailing of the notice of
deficiency a claim had been filed (whether or not filed) stating the
grounds upon which the commissioner of finance finds that there is an
overpayment.

For special restriction on credit or refund in a proceeding on a
petition for redetermination of a deficiency where the notice of
deficiency is issued as a result of (i) a net operating loss carryback,
or (ii) an increase or decrease in federal taxable income or federal
tax, or (iii) a federal change or correction or renegotiation, or
computation or recomputation of tax, which is treated in the same manner
as if it were a deficiency for federal income tax purposes, see
paragraph (g) of subdivision three of section seventy-four.

8. Early return.--For purposes of this section, any return filed
before the last day prescribed for the filing thereof shall be
considered as filed on such last day, determined without regard to any
extension of time granted the taxpayer.

9. Prepaid tax.--For purposes of this section, any tax paid by the
taxpayer before the last day prescribed for its payment (including any
amount paid by the taxpayer as estimated tax for a taxable year) shall
be deemed to have been paid by it on the fifteenth day of the third
month following the close of the taxable year the income of which is the
basis for tax under part two or part three of this title, or on the last
day prescribed in subpart one of part four or in part five for the
filing of a final return for such taxable year, or portion thereof,
determined in all cases without regard to any extension of time granted
the taxpayer.

10. Cross reference.--For provision barring refund of overpayment
credited against tax of a succeeding year, see subdivision two of
section seventy-seven.

11. Notice of change or correction of sales and compensating use tax
liability.--If a taxpayer is required by part two of this title to file
a report or amended return in respect of a change or correction of its
sales and compensating use tax liability, claim for credit or refund of
any resulting overpayment of tax shall be filed by the taxpayer within
two years from the time such report or amended return was required to be
filed with the commissioner of finance. If the report or amended return
required by part two of that title is not filed within the ninety day
period therein specified, interest on any resulting refund or credit
shall cease to accrue after such ninetieth day. The amount of such
credit or refund shall be computed without change of the allocation of
income or capital upon which the taxpayer's return (or any additional
assessment) was based, and shall not exceed the amount of the reduction
in tax attributable to such change or correction of sales and
compensating use tax liability.

This subdivision shall not affect the time within which or the amount
for which a claim for credit or refund may be filed apart from this
subdivision.