The Model Sales Tax Nexus Statute articulates several ways in which a remote seller is deemed “engaged in business” in a state in which it is not physically present. The statute extends the U.S. Supreme Court’s holdings in Tyler Pipe v. Washington, 483 U.S. 232 (1987), and Script v. Carson, 362 U.S. 207 (1960)—which held that activities by in-state representatives can attribute nexus to the out-of-state party—to activities conducted through the Internet. With states continuing to express dissatisfaction with the U.S. Supreme Court’s current sales tax jurisprudence, states are looking for new ways to chip away at the physical presence requirement upheld in Quill Corp. v. North Dakota, 504 U.S. 298 (1992).

In Quill Corp. v. North Dakota, 504 U.S. 298 (1992) the United States Supreme Court held that, under the Commerce Clause of the U.S. Constitution, a vendor without physical presence could not be required to collect a state’s sales and use tax. However, in Scripto, Inc. v. Carson, 362 U.S. 207 (1960) the Court upheld Florida’s right to compel the company to collect that state’s tax because non-employee sales representatives regularly solicited orders in the state on the company’s behalf. The Department noted that many online vendors have affiliates performing activities in PA on their behalf, such as operating distribution or fulfillment centers.