Until recently, the general rule on collecting sales tax by Internet retailers was determined by the U.S. Supreme Court in the case of Quill Corp. v. North Dakota in 1992, when the court ruled that a retailer needed to have a physical presence (e.g. a brick and mortar store) in the state to be required to collect a sales tax for the state at the time of purchase.
Since that time, the states have been trying to gain revenue by re-defining nexus for their state’s gain. Recently, the Ohio Supreme Court said any retailer doing over $500,000 in annual sales receipts would be required to charge sales tax as a “commercial activity tax.”
I looked at the same issue in a few other states for clarification. California has a similar law for retailers who do $1,000,000 per year. Connecticut has a similar law if there are affiliates in the state and only $2,000 of sales per quarter. New Jersey and New York have a similar law if there are affiliates in the state and $10,000 of sales per year. Pennsylvania only requires an affiliate link and has no minimum sales requirement. This list is only a sample and may be already out of date.
The bottom line is that Internet retailers can no longer rely on the Quill case requirement of a physical presence in a state before collecting sales tax becomes a legal requirement.
Please contact your local accountant for the rules in your particular state.