[Due for payment 2025-10-31] [$250] Distance/Tax - "Tax no longer valid" error shown on distance expense, then disappears

[jponikarchuk]

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Version Number: 9.2.16-10
Reproducible in staging?: Yes
Reproducible in production?: Yes
If this was caught during regression testing, add the test name, ID and link from TestRail: #68631
Email or phone of affected tester (no customers): N/A
Issue reported by: Applause Internal Team
Device used: MacBook Air 15.6.1 Chrome, iPhone 15 iOS 18.5 Safari
App Component: Money Requests

Action Performed:

1. Sign in to ND
2. Create a workspace
3. Enable Taxes in More features
4. Create a manual expense in the workspace chat
5. In the WS chat click "+" button - Create expense - Distance
6. Create a distance expense
7. Observe the report preview - it has a "Review" button with a red dot
8. Open the report - "Tax no longer valid" error is displayed on the distance expense row

Expected Result:

No error is shown on distance expense, when taxes are enabled in the workspace

Actual Result:

"Tax no longer valid" error shown on distance expense, then disappears

Workaround:

Unknown

Platforms:

• Android: App
• Android: mWeb Chrome
• iOS: App
• iOS: mWeb Safari
• iOS: mWeb Chrome
• Windows: Chrome
• MacOS: Chrome / Safari
• MacOS: Desktop

Screenshots/Videos

1.mp4

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• Last Price Increase: 2025-10-07
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• nkdengineer | Contributor | 109104848

Issue Owner

Current Issue Owner: @kadiealexander

[melvin-bot]

Triggered auto assignment to @kadiealexander (Bug), see https://stackoverflow.com/c/expensify/questions/14418 for more details. Please add this bug to a GH project, as outlined in the SO.

[samranahm]

Proposal

Please re-state the problem that we are trying to solve in this issue.

Distance/Tax - "Tax no longer valid" error shown on distance expense, then disappears

What is the root cause of that problem?

Here

App/src/libs/Violations/ViolationsUtils.ts

Lines 317 to 320 in 2549b41

	const hasTaxOutOfPolicyViolation = transactionViolations.some((violation) => violation.name === CONST.VIOLATIONS.TAX_OUT_OF_POLICY);
	const isPolicyTrackTaxEnabled = !!policy?.tax?.trackingEnabled;
	const isTaxInPolicy = Object.keys(policy.taxRates?.taxes ?? {}).some((key) => key === updatedTransaction.taxCode);

isTaxInPolicy is computed by checking if updatedTransaction.taxCode exists in policy.taxRates?.taxes.

When the expense is first created, updatedTransaction.taxCode not yet match the key in policy.taxRates?.taxes, leading to a temporary TAX_OUT_OF_POLICY violation.

What changes do you think we should make in order to solve the problem?

we should check isTaxCodeReady

const isTaxCodeReady = !!updatedTransaction.taxCode;
if (isPolicyTrackTaxEnabled && isTaxCodeReady && !hasTaxOutOfPolicyViolation && !isTaxInPolicy)

App/src/libs/Violations/ViolationsUtils.ts

Lines 441 to 444 in 2549b41

	if (isPolicyTrackTaxEnabled && !hasTaxOutOfPolicyViolation && !isTaxInPolicy) {
	newTransactionViolations.push({name: CONST.VIOLATIONS.TAX_OUT_OF_POLICY, type: CONST.VIOLATION_TYPES.VIOLATION});
	}

What specific scenarios should we cover in automated tests to prevent reintroducing this issue in the future?

N/A

What alternative solutions did you explore? (Optional)

Reminder: Please use plain English, be brief and avoid jargon. Feel free to use images, charts or pseudo-code if necessary. Do not post large multi-line diffs or write walls of text. Do not create PRs unless you have been hired for this job.

[nyomanjyotisa]

Proposal

Please re-state the problem that we are trying to solve in this issue.

Distance/Tax - "Tax no longer valid" error shown on distance expense, then disappears

What is the root cause of that problem?

When a distance expense is created with taxes enabled in the workspace, tax validation runs before the distance rate tax code is properly loaded

• updatedTransaction.taxCode is initially empty/undefined
• isTaxInPolicy evaluates to false because no tax code exists
• TAX_OUT_OF_POLICY violation is incorrectly added
• Once the distance rate loads and sets the proper tax code, the violation is removed

App/src/libs/Violations/ViolationsUtils.ts

Lines 442 to 448 in 60dd002

	if (isPolicyTrackTaxEnabled && !hasTaxOutOfPolicyViolation && !isTaxInPolicy) {
	newTransactionViolations.push({name: CONST.VIOLATIONS.TAX_OUT_OF_POLICY, type: CONST.VIOLATION_TYPES.VIOLATION});
	}
	if (isPolicyTrackTaxEnabled && hasTaxOutOfPolicyViolation && isTaxInPolicy) {
	newTransactionViolations = reject(newTransactionViolations, {name: CONST.VIOLATIONS.TAX_OUT_OF_POLICY});
	}

What changes do you think we should make in order to solve the problem?

We can skip tax validation for distance requests that don't have a tax code set yet

if (isPolicyTrackTaxEnabled && !hasTaxOutOfPolicyViolation && !isTaxInPolicy) {
    // Skip tax validation for distance requests that don't have a tax code yet
    const isDistanceRequest = TransactionUtils.isDistanceRequest(updatedTransaction);
    if (!isDistanceRequest || updatedTransaction.taxCode) {
        newTransactionViolations.push({name: CONST.VIOLATIONS.TAX_OUT_OF_POLICY, type: CONST.VIOLATION_TYPES.VIOLATION});
    }
}

What specific scenarios should we cover in automated tests to prevent reintroducing this issue in the future?

None

What alternative solutions did you explore? (Optional)

None

[nkdengineer]

Proposal

Please re-state the problem that we are trying to solve in this issue.

"Tax no longer valid" error shown on distance expense, then disappears

What is the root cause of that problem?

We are using !!policy?.tax?.trackingEnabled here and this is not enough to check if we have track tax enabled on distance rates

App/src/libs/Violations/ViolationsUtils.ts

Line 318 in 60dd002

const isPolicyTrackTaxEnabled = !!policy?.tax?.trackingEnabled;

We are calculating the taxCode based on the getDefaultTaxCode function here then passing it as a params when calling the CreateDistanceRequest API

App/src/pages/iou/request/step/IOURequestStepConfirmation.tsx

Lines 197 to 198 in 60dd002

	const defaultTaxCode = getDefaultTaxCode(policy, transaction);
	const transactionTaxCode = (transaction?.taxCode ? transaction?.taxCode : defaultTaxCode) ?? '';

App/src/pages/iou/request/step/IOURequestStepConfirmation.tsx

Line 689 in 60dd002

taxCode: transactionTaxCode,

And in the getDefaultTaxCode we are just returning the tax of customUnitRate but in case we don't set tax rate for customUnitRate then back end is returning default value of tax

App/src/libs/TransactionUtils/index.ts

Lines 1415 to 1420 in 60dd002

	function getDefaultTaxCode(policy: OnyxEntry<Policy>, transaction: OnyxEntry<Transaction>, currency?: string | undefined): string | undefined {
	if (isDistanceRequest(transaction)) {
	const customUnitRateID = getRateID(transaction) ?? '';
	const customUnitRate = getDistanceRateCustomUnitRate(policy, customUnitRateID);
	return customUnitRate?.attributes?.taxRateExternalID;
	}

What changes do you think we should make in order to solve the problem?

1. We should update the condition to check isPolicyTrackTaxEnabled by using isTaxTrackingEnabled like we did in other places

        const isDistanceRequest = TransactionUtils.isDistanceRequest(updatedTransaction);
        const isPerDiemRequest = TransactionUtils.isPerDiemRequest(updatedTransaction);
        const isPolicyTrackTaxEnabled = isTaxTrackingEnabled(true, policy, isDistanceRequest, isPerDiemRequest); // we can use isPolicyExpenseChat here

App/src/libs/Violations/ViolationsUtils.ts

Line 318 in 60dd002

const isPolicyTrackTaxEnabled = !!policy?.tax?.trackingEnabled;

App/src/libs/PolicyUtils.ts

Lines 538 to 548 in 60dd002

	function isTaxTrackingEnabled(isPolicyExpenseChat: boolean, policy: OnyxEntry<Policy>, isDistanceRequest: boolean, isPerDiemRequest = false): boolean {
	if (isPerDiemRequest) {
	return false;
	}
	const distanceUnit = getDistanceRateCustomUnit(policy);
	const customUnitID = distanceUnit?.customUnitID ?? CONST.DEFAULT_NUMBER_ID;
	const isPolicyTaxTrackingEnabled = isPolicyExpenseChat && policy?.tax?.trackingEnabled;
	const isTaxEnabledForDistance = isPolicyTaxTrackingEnabled && !!customUnitID && policy?.customUnits?.[customUnitID]?.attributes?.taxEnabled;
	return !!(isDistanceRequest ? isTaxEnabledForDistance : isPolicyTaxTrackingEnabled);
	}

2. In case track tax is enabled in distance rates settings, we should update the getDefaultTaxCode function so that it returns the default value of the tax (similar to what Back End is returning) instead of leaving the value empty.

    if (isDistanceRequest(transaction)) {
        const customUnitRateID = getRateID(transaction) ?? '';
        const customUnitRate = getDistanceRateCustomUnitRate(policy, customUnitRateID);
        const customUnit = getDistanceRateCustomUnit(policy);
        if(!customUnitRate?.attributes?.taxRateExternalID && customUnit?.attributes?.taxEnabled) {
            return policy?.taxRates?.defaultExternalID;
        }
        return customUnitRate?.attributes?.taxRateExternalID;
    }

App/src/libs/TransactionUtils/index.ts

Lines 1415 to 1420 in 60dd002

	function getDefaultTaxCode(policy: OnyxEntry<Policy>, transaction: OnyxEntry<Transaction>, currency?: string | undefined): string | undefined {
	if (isDistanceRequest(transaction)) {
	const customUnitRateID = getRateID(transaction) ?? '';
	const customUnitRate = getDistanceRateCustomUnitRate(policy, customUnitRateID);
	return customUnitRate?.attributes?.taxRateExternalID;
	}

What specific scenarios should we cover in automated tests to prevent reintroducing this issue in the future?

We can write a test for the getDefaultTaxCode function to cover this screnario

What alternative solutions did you explore? (Optional)

Reminder: Please use plain English, be brief and avoid jargon. Feel free to use images, charts or pseudo-code if necessary. Do not post large multi-line diffs or write walls of text. Do not create PRs unless you have been hired for this job.

[muhammad-ali-abbasi]

Please re-state the problem that we are trying to solve in this issue.

Distance/Tax - "Tax no longer valid" error shown on distance expense, then disappears

What is the root cause of that problem?

When creating distance expenses in a workspace with taxes enabled, the app briefly shows "Tax no longer valid"
error before it disappears. This occurs due to a race condition in tax validation during distance expense
creation.

Technical Root Cause

The issue stems from how tax codes are validated for distance expenses:

1. Distance Expense Tax Code Assignment (TransactionUtils/index.ts):

function getDefaultTaxCode(policy: OnyxEntry<Policy>, transaction: OnyxEntry<Transaction>, currency?: string |
undefined): string | undefined {
    if (isDistanceRequest(transaction)) {
        const customUnitRateID = getRateID(transaction) ?? '';
        const customUnitRate = getDistanceRateCustomUnitRate(policy, customUnitRateID);
        return customUnitRate?.attributes?.taxRateExternalID; // This can be undefined initially
    }
    // ... other logic
}

2. Tax Validation Logic (ViolationsUtils.ts):

const isTaxInPolicy = Object.keys(policy.taxRates?.taxes ?? {}).some((key) => key === updatedTransaction.taxCode);

if (isPolicyTrackTaxEnabled && !hasTaxOutOfPolicyViolation && !isTaxInPolicy) {
    newTransactionViolations.push({name: CONST.VIOLATIONS.TAX_OUT_OF_POLICY, type:
CONST.VIOLATION_TYPES.VIOLATION});
}

What changes do you think we should make in order to solve the problem?

The fix should modify the tax validation logic in ViolationsUtils.ts to:

1. Wait for Distance Rate Loading: Don't validate tax codes for distance expenses until custom unit rate data is
   fully loaded
2. Default Tax Handling: Use workspace default tax when distance rate tax is not yet available
3. Loading State Awareness: Check if transaction is still in a loading state before applying tax violations

App/src/libs/Violations/ViolationsUtils.ts:442-448

// Only validate tax for distance requests if custom unit rate is fully loaded
 if (isPolicyTrackTaxEnabled && !hasTaxOutOfPolicyViolation && !isTaxInPolicy) {
     const isDistanceTransaction = isDistanceRequest(updatedTransaction);
     const customUnitRateID = getRateID(updatedTransaction);
     const isCustomUnitRateLoaded = !isDistanceTransaction ||
         (customUnitRateID && getDistanceRateCustomUnitRate(policy, customUnitRateID));

     if (isCustomUnitRateLoaded) {
         newTransactionViolations.push({name: CONST.VIOLATIONS.TAX_OUT_OF_POLICY, type:
 CONST.VIOLATION_TYPES.VIOLATION});
     }
 }

This ensures tax validation only occurs when the distance rate data is fully loaded, preventing the temporary "Tax
no longer valid" error.

What specific scenarios should we cover in automated tests to prevent reintroducing this issue in the future?

N/A

What alternative solutions did you explore? (Optional)

[melvin-bot]

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