Why does the balance sheet show a federal tax liability when the taxes have been paid?

Hi ccpsfinance@chri,

Thanks for reaching out here.  Welcome!  QuickBooks Online has a dynamic feature for managing your sales tax and recording payments.  I'll be happy to assist!

Based on the information you've provided, I agree with your findings.  Entering the sales tax payment as an expense won't apply it to the sales tax module.  Here's how to record the payment;

1. Open Taxes from the left menu and select Sales tax

2. From the Filings tab, locate the tax filing from the Filed section

3. Hit Record payment from the ▼ dropdown menu

4. Using the Bank Account dropdown, select the account you're making the payment from

5. Enter the Payment Date

6. Hit Record payment at the bottom

Here's a helpful guide for your reference.

Feel free to reach back out if you have any other questions.  We'd love to help!