[3] The physical presence test is based on Quill Corp. v. North Dakota, ( 504 U.S. 298 (1992)), a United States Supreme Court ruling concerning use tax.
Still, it had a licensed computer software program that some of its North Dakota customers used to check Quill's current inventories and place orders directly.
The Quill physical presence test is used by some states to determine whether or not a company must pay a franchise tax.
This test, which seems to contradict Quill, implied that States have the right to tax or "nexus" solely on the basis that a company has sales or otherwise derives an economic benefit from activities within their borders.
[4] For states that have a franchise tax, the amount is often either a flat fee or based on the size of the business's total holdings.