Final answer:
A taxpayer with excess state disability insurance withholdings due to multiple employers should contact the IRS or the state tax agency for guidance on claiming a refund. The taxpayer does not need to seek legal advice or file an appeal unless there's a dispute not resolved through normal procedures.
Step-by-step explanation:
If a taxpayer has more than one employer and has excess state disability insurance or voluntary plan disability insurance withheld, they essentially have too much tax withheld due to the combined amount surpassing the annual limit. The correct course of action in this case is to contact the IRS or the respective state tax agency. This situation arises because each employer may withhold taxes without being aware of the other employers' withholdings. After contacting the IRS or the state agency, the taxpayer may be instructed to file a claim or adjust their tax return to receive a refund of the excess amount paid.
The process of tax withholding, such as those for individual income taxes and Social Security benefits, is streamlined and computerized, which generally makes it efficient for both the employer and employee. However, it does not automatically account for multiple employers. The IRS or the state tax agency can provide guidance to reconcile these overpayments.
If any taxpayer finds themselves with withheld amounts for state disability insurance exceeding the maximum threshold, approaching the IRS or appropriate state tax agency would be more advisable compared to seeking legal advice or filing an appeal unless there is a dispute that cannot be resolved through the standard procedures provided by the tax agencies.