Under what circumstances would a tax refund not apply to the arrears balance right away?
If a tax intercept is from a joint tax filing, it will need to be held for 90 days to give the non-obligated spouse the opportunity to claim his or her portion through the IRS. In a case in which the collection is from a joint return, the federal government has requested the State to hold the refund for the 90-day period because the State would have to repay the Treasury Department if there was a claim made by the spouse and money was already disbursed.
