Hi @prodigy811 !
The 'system' domain is the default and can't be deleted. As you mentioned you can always specify the domain you want to use for authentication/authorization session using '@<domain_name>', so it works as it should. What you can do is to restrict authentication and authorization for the 'system' domain to 'local', e.g. it will use locally configured users. It is always good to have alternative way to access your device if TACACS server becomes unavailable, I am sure even in your default domain you keep 'local' as a secondary authentication/authorization method.
Maybe there is even better method to restrict any connection with '@SYSTEM', let's keep this discussion open for better ideas from other users (-: