This section of our affiliate system's help page explains our typical, recommended method of paying your affiliates:
Simply put, when you generate your monthly masspay.txt file, it just takes the current state of all transactions in the last completed calendar month and adds up the total commission earnings for each affiliate in that month. Any refunds issued up to that moment for sales in the prior month would exclude those commissions from the monthly earnings totals, but any refunds issued for that month after you obtain the masspay file would not be "rolled over" to affect commission totals calculated for the next month. You can at least regenerate a fresh masspay file to recalculate the last month's commission totals up until the end of the current month.
If you offer a 60-day refund policy, you may want to generate your masspay file at the very end of each month, so at least refunds issued within the month of the original sale and the following month would be accounted-for. However, you'd still need to watch for any refunds occurring after that point and, if necessary, manually edit your masspay file accordingly before you submit it to PayPal Mass Payments. You could hang onto the masspay file for a month before submitting it to PayPal, giving you time to amend it if necessary, or just adjust the next month's masspay file to account for late-breaking refunds.