From what I understand from your question, you do not have a demand for tax but a refund.
Anyways, so far a statute of limitation goes, it IS 20 years. However, it is important to know WHEN this period starts. SOL -- Statute of Limitation Period -- The time period begins to run on the assessment date, commonly called the statutory lien date (SLD). Collection stays suspend or extend the 20-year SOL.
Law provides that if a tax liability is not paid at the time that it becomes “due and payable;” a perfected and enforceable state tax lien is created for the amount of the tax liability. This point in time is called the assessment date or the SLD. If more than one liability is “due and payable” for a particular taxable year, the later date is used. For example, a taxpayer files a return with a balance due on April 15, 1999, and we later audit the year and issue a Notice of Proposed Assessment that becomes due and payable on April 15, 2001, the SLD is April 15, 2001.
Coming to the core point again, if you are / your client is NOT facing any major losses, he should accept the refund and move on.
I am sure this would help. I wish you good luck.
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