Thank you for posting to the PayPal Sandbox Community.
The sandbox environment is virtual. What that means is that the customer was never charged if they made a payment to the sandbox environment. The Sandbox Servers are completely separated from the live servers.
You can refund the payment in sandbox, so that it shows refunded for your testing purposes. The buyer wouldn't have been charged, however, since everything to do with sandbox is virtual no real money exchange occurs. Since no real money exchange occurs, a sandbox transaction can never be sent to the live servers.
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