When you create a payroll Accounts Payable record with withholding, the distribution of expenses will look something like this:

Non-Clerical Salary 1000.00

FIT Withholding -100.00

SSA & Medicare Withholding -67.50

Net Amount 832.50

Each of the withholding expense accounts will point to a Liability Account such as Federal Taxes Withheld, which will in turn point to (usually) the Main Checking Account. The liability will also point to the General Operations Fund.

The way this works is that the salary and deductions will all go against the General Operations Fund, and reduce it by $832.50. The withholdings alone will go against the Liability (Federal Taxes Withheld), and will increase that liability by $167.50.

When you write your check to the FRB to pay for the taxes withheld, you will again use the same (or equivalent) withholding expense accounts. This time, the amounts paid will be positive, and that will finish reducing the General Operations Fund by $167.50, and will reduce the Federal Tax liability by the same amount.

The net result at this point, ignoring any other transactions, will be that the General Operations Fund will be reduced by the $1000 total, and the government will thank you for collecting $167.50 of that amount for them.