QB Issue Resolution:

Make it a Bank type of account.

When you pay them, that is From checking to “Permit Prepay Bank.”

When they Apply it, that is Write Check, from the Permit Prepay Bank.

Resolution for Issue 'Setup an automatic pay account for building permits' available: Yes (Solved).
Source: Intuit Community forum.

Setup an automatic pay account for building permits: 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.

Support for building permits
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Error Recovery for building permits [Canada]
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