QB Issue Resolution:

You can use the other income account as suggested. Then go to pay sales tax and there you will have an option to adjust sales tax, Make the adjustment there with notes stating why.

Resolution for Issue 'Recording sales tax refund for overpayment of state taxes.' available: Yes (Solved).
Source: Intuit Community forum.

Recording sales tax refund for overpayment of state taxes.: this issue or error code is a known issue in Quickbooks Online (QBO) and/or Quickbooks. Support for this issue is available either by self-service or paid support options. Experts are available to resolve your Quickbooks issue to ensure minimal downtime and continue running your business. First try to resolve the issue yourself by looking for a resolution described below. If it is a complex issue or you are unable to solve the issue, you may contact us by clicking here or by using other support options.

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