I have no idea what could be wrong, so I made a level that you can copy.I've tried pretty much every option. What is strange is if i set inverted to yes, the material will automatically be destroyed even if the tag is within range or not. It doesnt matter what i chose, it still just automatically gets destroyed at once.
Here is a vita lbp me link to the level:
http://vita.lbp.me/v/997sb