This error message occurs when the tax name you're trying to set up is already used with an existing tax agency. You can either add an extra character to the new one or edit the name of the existing agency if you're using the old Sales Tax Center.
Click Taxes on the left side menu.
Choose Sales Tax.
Click Add/edit tax rates and agencies under the Related Task section.
Select the tax agency and click Edit.
Change the name and click Save.
You can also include the inactive tax agency name to show the list of all your sales tax. Then, set up your Sales Tax again.
If you're using Automated Sales Tax, you'll need to use another name different from the existing one. For more details about Automated Sales Tax, you can check out to this article: Set up and use Automated Sales Tax.
Feel free to reply to this post if you need anything else about sales tax. I'm here to help.
I want to let you know that we received similar reports from other users experiencing the same behavior setting up Sales Tax for the first time. Our product team knows and is working for a resolution to this issue.
To receive new information and changes with the progress of the investigation, I recommend giving our Customer Care Team a call. They can pull up your account in a secure environment and add it to the list of affected users. This way, we’ll be able to notify you of any updates once received.