There are 2 workarounds:
1. Include the area code in the fax number field in the address book for people that fall into the 10-digit local number area. For example, if Joe Smith lives in area code 123, make the number for Joe Smith 123-555-1234 instead of 555-1234. You will need to make this modification to the phone number of each local fax recipient.
2. Include a 1 before the area code of recipients outside of the local area code. Do not put a 1 in the long distance prefix area of the Dialing Setup dialog. For example, if a recipient lives in area code 456, replace the 456 with 1456. You will need to make this modification to the phone number of each long distance fax recipient. It also requires that the local area code be set to something other than the correct area code so that it always gets dialed.
There are other possible combinations using the Always Dial Area Code and the suggestions above, but they are rather tedious.
Note: For the Always Dial Area Code option you must select the extended option in the address editing mode.