Create referenced entities if they don't already exist

Steps to reproduce:
1. Add a field to a content type (Article in my case)
2. Choose taxonomy term for the new field
3. Check an existing vocabulary to reference
4. Check Create referenced entities if they don't already exist and save the field
5. Go to add content and choose the content type you added this taxonomy reference to
6. In the taxonomy field, type a taxonomy term that does not exists (assuming this should be created upon submit)
7. Submit the form
8. Receive: Fatal error: Call to a member function getEntityTypeId() on a non-object in /var/www/html/deca/core/includes/entity.inc on line 359