I have spent almost 8 hours just trying to get the tax codes to work properly for my site (only need it for one state). I think I have tracked the problem down to when the user checks out, it is not pulling the State information from the CB field "cb_statedropdown" (I'm using the CB state and country drop down plugin). Even when I force to use an invoicing address in checkout, the State/Province list is empty. I did manage to get it to show a list of states one time. I had changed the field on CBSUB Settings->Display->invoices to a new field I created for testing purposes (it was named cb_state2 and was just a simple text field that had not been filled out upon registration) and when I hit refresh on the invoicing address page, I was able to select the proper state, and the tax was applied, but that was the only time it worked.

I also tried modifying the edit.front.invoice.xml file to use the whole state value to pull the correct information from the database, but it doesn't work either (found this helped some people in another post on here).
I.E. <option value="West Virginia">West Virginia</option>
I've even tried not using the CB State/Country fields and created my own drop down for state, but it still doesn't apply the tax. I've tried so many things in the last 8 hours that I can't remember them all, those were just the last few things I have tried.

So, I guess the tax is most likely working, but the invoicing part is not pulling the user registration for the correct fields.

Ok, I'm not quite following. The State field is mandatory upon registration, so that value is never blank. I've tried this with the CB state/country plugin, and trying it with my own defined CB Field dropdown. Even the user profile shows the correct information after registering.

What CBSubs field are you referring to? In the edit.front.invoice.xml?

The only thing I've altered is one piece of the XML file trying to get it to work correctly. Under the "<type name="state" base="list" valuetype="string">" section, I changed <option value="WV">West Virginia</option> to <option value="West Virginia">West Virginia</option> (this is the only state we will require tax)

Look at the attachments for screen shots on how I have it set up. No matter what I do, even forcing an invoicing address, the states / province area is blank (this was occurring before I started editing the "edit.front.invoice.xml" file)