Verify the date of the Paypal transaction. Per Paypal's restriction, you can only refund within 60 days from the initial transaction date.

Here is a link to Paypal's refund documentation.

If the transaction is within the 60 day threshold and it still cannot be refunded, then it might be failing for another reason. There could be something wrong with the constituent's Paypal account. Run a Transaction Detail report for that constituent and you should be able to see the refund attempts in the report with an error code. The codes may look something like this:

TIMESTAMP=2015%2d05%2d28T17%3a00%3a12Z&CORRELATIONID=635ca8f06968&ACK=Failure&VERSION=63%2e0&BUILD=16837281&L_ERRORCODE0=10009&L_SHORTMESSAGE0=Transaction%20refused&L_LONGMESSAGE0=This%20transaction%20has%20already%20been%20fully%20refunded&L_SEVERITYCODE0=Error

You can use the error code to cross reference with Paypal API errors. You should use the code that comes after ERRORCODE0= which in this example is 10009. Looking at the documentation, it appears that the reason why this transcation can't be refunded is because their account is locked or inactive.