We have a charged off account that received a tax refund today. It is not a closed account, just restrictive posting. Can we apply the tax refund to this account?

What does restrictive posting mean? The customer can freely use it and they think it is still open?

The fact that your core has a separate account status code for "Closed" and "Charged Off" doesn't make the account any less closed or your deposit contract any less void.

Your only option is to return the credit "Account closed"