Unable to Delete Vendor due to child records and related tax items

You have to initially unmark the Tax Agency box on the vendor category to be able to access the shadow tax agency.

1. Navigate to Setup > Accounting > Accounting Lists.
2. Set Type to Vendor Category.
3. Edit the Tax Agency (internal ID = 3).
4. Unmark the Tax Agency box.
5. Click Save.

After deleting the Vendor Record, mark the Tax Agency box using the same steps.