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State Tax not being added, sorta


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I am have a very strange tax issue in 1.4.1. I have to collect state tax but don't have customers from within my state real often. I just noticed it wasn't working correctly, think it had been working correctly prior to me upgrading to 1.4.1 over a year ago.

 

The cart never reflects a tax being charged but the invoice shows tax being calculated. However the actual amount the customer is charged through paypal is the total without tax. I have gone through all my settings multiple times without finding a solution. Below is a copy of the invoice details that show the tax info. Also is a screen shot of the tax rule setup.

 

If I go to Tax Rules- My State- North America and say apply my state tax rule to all USA it works for all customers. I don't want tax for all states, but it at least proves in theory things should work for the state level.

 

This one has me stumped.

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