I'm having this same problem.  I have an employee who is in SC but his mailing address is in VA.  QB wants me to set up a withholding account for VA (business is in SC).  I did as QB suggests but every week I am flagged to enter VA withholding and now QB wants me to file tax return for that state.

Is there another way around this?  Is there any way to list a mailing address without it prompting me to add withholding tax info for that state?