Hi Corey,
From what I can tell, the region code is referring to the zip code. I entered 38111 in the settings and then used it in the billing/shipping information at checkout, and the tax reflected an amount other than 0.
I agree with you. This should be something you can setup by state, not just b zip code. What is it, a thousand or so zip codes just for the state of Tennessee? I'm not going to enter all that.
Or, you can pay the $100 for a year subscription to the dashCommerce tax provider web service.
http://www.dashcommerce.com/Product-Mettle-Systems-dashCommerce-Tax-Web-Service_3.aspx
If I have some time, I'm going to see if I can create my own "provider" that will allow me to set it by state.