This error comes when there is any issue in the Tax Configuration which happens through the Vertex (Extenal calculation system).
This Vertex calculation relating to SAP in case of US /CA countries.
This tax rates are defined based on the Jurisdiction code...Jurisdiction code has four levels TCODE:OBCO this is defined specific to the tax procedure.
Activation of the external calculation system : Implementation Guide for R/3 Customizing (IMG)>Financial Accounting>Financial Accounting Global Settings>Tax on Sales/Purchases>Basic Settings>External Tax Calculation>Activate External Tax Calculation if the tax procedure activated here then system expects the Jurisdiction code in the Customer/Vendor master data and based on the code it goes to the Vertex system which is connected through the RFC destinations, and gets the rate applies here in SAP and calculates the tax.
This is tax jurisdiction error. We assign tax juridiction at three levels
1) At plant level: We give the tax jurisdiction at the time plant definition
2) At SD level: We maintain at VK11 t.code
3) At fi level: Spro-FA-FAGL-Tax on sales or purchases-define tax jurisdiction
Plz check the tax juris at the above level.
Thanks and regards,