diff --git a/src/libs/TransactionUtils/index.ts b/src/libs/TransactionUtils/index.ts
index ef84dc6a8af0..9865acc3b2da 100644
--- a/src/libs/TransactionUtils/index.ts
+++ b/src/libs/TransactionUtils/index.ts
@@ -21,6 +21,7 @@ import {rand64, roundToTwoDecimalPlaces} from '@libs/NumberUtils';
 import {getPersonalDetailsByIDs} from '@libs/PersonalDetailsUtils';
 import {
     getCommaSeparatedTagNameWithSanitizedColons,
+    getDistanceRateCustomUnit,
     getDistanceRateCustomUnitRate,
     getPolicy,
     getTaxByID,
@@ -1446,6 +1447,10 @@ function getDefaultTaxCode(policy: OnyxEntry<Policy>, transaction: OnyxEntry<Tra
     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;
     }
     const defaultExternalID = policy?.taxRates?.defaultExternalID;
diff --git a/src/libs/Violations/ViolationsUtils.ts b/src/libs/Violations/ViolationsUtils.ts
index 80999381f056..436a5c85ff00 100644
--- a/src/libs/Violations/ViolationsUtils.ts
+++ b/src/libs/Violations/ViolationsUtils.ts
@@ -8,7 +8,7 @@ import * as CurrencyUtils from '@libs/CurrencyUtils';
 import DateUtils from '@libs/DateUtils';
 import {isReceiptError} from '@libs/ErrorUtils';
 import Parser from '@libs/Parser';
-import {getDistanceRateCustomUnitRate, getPerDiemRateCustomUnitRate, getSortedTagKeys} from '@libs/PolicyUtils';
+import {getDistanceRateCustomUnitRate, getPerDiemRateCustomUnitRate, getSortedTagKeys, isTaxTrackingEnabled} from '@libs/PolicyUtils';
 import * as TransactionUtils from '@libs/TransactionUtils';
 import {shouldShowViolation} from '@libs/TransactionUtils';
 import CONST from '@src/CONST';
@@ -318,7 +318,9 @@ const ViolationsUtils = {
         const hasCategoryOverLimitViolation = transactionViolations.some((violation) => violation.name === CONST.VIOLATIONS.OVER_CATEGORY_LIMIT);
         const hasMissingCommentViolation = transactionViolations.some((violation) => violation.name === CONST.VIOLATIONS.MISSING_COMMENT);
         const hasTaxOutOfPolicyViolation = transactionViolations.some((violation) => violation.name === CONST.VIOLATIONS.TAX_OUT_OF_POLICY);
-        const isPolicyTrackTaxEnabled = !!policy?.tax?.trackingEnabled;
+        const isDistanceRequest = TransactionUtils.isDistanceRequest(updatedTransaction);
+        const isPerDiemRequest = TransactionUtils.isPerDiemRequest(updatedTransaction);
+        const isPolicyTrackTaxEnabled = isTaxTrackingEnabled(true, policy, isDistanceRequest, isPerDiemRequest);
         const isTaxInPolicy = Object.keys(policy.taxRates?.taxes ?? {}).some((key) => key === updatedTransaction.taxCode);
 
         // eslint-disable-next-line @typescript-eslint/prefer-nullish-coalescing