Your code should work if both PONumber is blank AND MechantState is both. Or you could say "this is only TRUE when both PONumber is empty AND MerchantState is empty".
Try the code with just IsBlank(PONumber):
SortByColumns(Filter([@'CCStatement'], IsBlank(PONumber), StartsWith(MerchantName, TextSearchBox1.Text) ), "MerchantName", If(SortDescending1, Descending, Ascending))
and then try just IsBlank(MerchantState):
SortByColumns(Filter([@'CCStatement'], IsBlank(MerchantState), StartsWith(MerchantName, TextSearchBox1.Text) ), "MerchantName", If(SortDescending1, Descending, Ascending))
and make sure each one filters as you expect.