He's correct. It's not bugged. Poison Tai still does dmg if you have Tai *ion and deals some HP. It will work as long as the enemy HP got hit even a little.

If you play against Earth main, better to have Karin or Kankuro in your team, their poison goes through shield, because it's ninjutsu, also try to acupuncture Earth main to stop him from shielding team.