IIRC, it has to do with where the purchaser receives the merchandise, not where the seller is located. Yep, it's kind of odd.

Example from my past: Customer who lived across state lines only about 30 minutes from where I worked had a tax status that let him order items from us and not pay our state's sales tax when we shipped the items. However, if he was in a hurry and drove over to pick up the items directly, he had to pay our state's sales tax.

Don't ask me why, I didn't make the rules. And this is from 30 years ago, so my memories may not be 100% accurate, but that's the gist of it.