If you sell a PDF, a template, a course, or membership access, the legal questions look different from a shop selling a physical product — and genuinely messier in one specific way: sales tax on digital goods is inconsistent from state to state, sometimes even within a state depending on how the product is delivered, and it keeps changing. Layer on top of that the fact that what you're actually selling is a license to your own copyrighted work, not the work itself, and that the Federal Trade Commission (FTC) treats "you can make money doing this" claims as advertising that has to be backed up. None of that is a reason to be scared off — it's a reason to set a few things up correctly from the start.
Sales tax on digital products: expect it to vary, because it does
Whether you have to charge sales tax on a downloadable file, an online course, or streamed access depends on the state, and there's no shortcut around checking. Some states tax digital products the same as tangible goods; some don't tax them at all; and some draw a real line between a permanent download (taxed like buying a physical copy) and temporary or streamed access (which may be taxed differently, or not at all). States keep changing this — one that didn't tax digital goods a couple of years ago may tax them now.
The economic nexus rules that apply to online sellers generally apply here too: once your sales into a state cross that state's threshold, you may owe that state's tax on sales to its residents, even with no physical presence there — and digital products can cross those thresholds faster than physical inventory does. Those thresholds are set state by state and they change, so don't rely on a number you saw once. What to do: check each state's own department of revenue site for how it classifies digital goods and streaming versus downloads, and revisit it periodically — this is one of the fastest-changing corners of state tax law.
If a marketplace or platform is the "merchant of record," it may be collecting for you — but verify
Many course and digital-product platforms, and most marketplaces, act as the merchant of record for the sale: they process the payment, and under marketplace-facilitator laws that most states with a sales tax now have, they may be the one legally responsible for collecting and remitting that state's sales tax — not you. But "may" is doing real work there. Some platforms are the merchant of record for all sales; some only for certain product types or states; some just process payment and leave tax collection to you entirely. Read your specific platform's tax policy — a payment processor and a merchant of record aren't the same thing. Sell directly from your own website using a payment processor, and you're almost certainly the one responsible for registering and collecting sales tax yourself, the same as any seller who obtains a seller's permit and collects tax on taxable sales. Registration duties and their deadlines are set by each state, so confirm the timing with that state's revenue agency rather than assuming a grace period.
What you're selling is a license, not your rights
You own the copyright in the course, ebook, template, or other material you created the moment you fix it in a tangible form — you don't have to register anything for the copyright to exist, though registering with the U.S. Copyright Office gives you extra legal advantages if you ever need to enforce it. When you sell access to a customer, you aren't selling them the copyright — you're granting them a license: permission to use your work on the terms you set, while you keep ownership.
Spell out those terms in plain language customers can find and agree to before or at checkout:
Personal vs. commercial use. Can the buyer use your template or course material just for themselves, or in their own paid work? Say so explicitly — silence invites a good-faith customer to assume more than you intended.
No resale or redistribution. Buyers of a license generally can't resell your file, repost your course video, or share their login — say that plainly, because people who'd never shoplift a physical product often don't think twice about forwarding a PDF.
Refund terms. Once someone has downloaded a file or finished a course, "returning" it doesn't undo their access the way returning a sweater does. Decide your refund window up front and state it clearly — vague refund policies are a common source of chargebacks and complaints.
A short, clear license people can actually read protects you better than a long one nobody reads.
Clear the rights to anything you didn't create yourself
If your course, template, or ebook includes stock photos, fonts, or background music, you need a license that covers how you're actually using it — a free or cheap stock license for personal use often doesn't cover reselling it inside a paid product.
Stock images and video — check whether the license covers commercial resale and how many copies or end users it permits.
Fonts — most carry an end-user license agreement, and many free-for-personal-use fonts prohibit embedding them in a product you sell, including a PDF or video. A commercial "embedding" license is often a separate purchase.
Music — background music usually needs a license covering that specific use, including rights to both the composition and the recording. "Royalty-free" doesn't mean "free" — it means you pay once instead of per use, under whatever terms that license sets.
Keep receipts and license terms for every third-party asset in a product you sell, in case a rights-holder ever asks you to prove you had permission.
Claims about income and results are advertising, and the FTC treats them that way
If your marketing says or implies that a customer will make money, save time, get a job, or achieve some other measurable result by buying your course or template, the FTC treats that as an advertising claim: it has to be truthful, and you need a reasonable basis for it — real evidence, in hand, at the time you make the claim, not something you go looking for if a regulator or a customer challenges you later. "I believe it works" isn't substantiation; evidence that a typical buyer actually gets that result is. The FTC's guidance on endorsements, testimonials, and reviews lays out what's expected: testimonials have to reflect what a typical customer actually experiences, or any atypical result has to be clearly and conspicuously disclosed. You can't feature your single best success story as the norm without saying so.
Courses and coaching programs that sell the promise of income — especially income from reselling a similar course to others — sit squarely in a long-running FTC enforcement priority, and the agency has repeatedly brought cases over unsubstantiated earnings claims and deceptive guarantees.
The Business Opportunity Rule: narrower than most people think, and strict when it applies
There's a structural rule separate from truth-in-advertising: the FTC's Business Opportunity Rule (16 C.F.R. Part 437). A lot of online advice gets this one wrong, so it's worth being precise. It does not turn on how expensive your program is, whether you bundle coaching, or whether you call it a "system." It applies when three things line up: you solicit someone to enter a new business; that person makes a required payment; and you represent, expressly or by implication, that you or someone you designate will do one of three specific things — provide locations for equipment, displays, or vending devices the buyer pays for; provide outlets, accounts, or customers for the buyer's goods or services (including internet outlets, accounts, or customers); or buy back what the buyer produces or provides.
Selling information, training, or coaching by itself generally doesn't meet that third element. Promising to hand buyers clients, accounts, or done-for-you sales channels can. That's the line to watch.
Where the rule does apply, it's demanding. You must give the buyer the required disclosure document at least seven calendar days before the earlier of when they sign any contract or make any payment. And if you make an earnings claim, you need written substantiation in your possession when you make it, you have to make that substantiation available on request, and you have to hand the buyer a separate Earnings Claim Statement — which has to disclose, among other things, the number and percentage of prior buyers who actually achieved at least the earnings you're advertising. That last requirement is what most "look what my students made" marketing could not survive.
A related but different rule, the Franchise Rule, applies where a buyer gets the right to operate a business identified with your trademark, you exert significant control over or provide significant assistance with how they operate, and they make a required payment. Some states have their own franchise and business-opportunity registration laws layered on top, with their own definitions — so check your state as well. All of these are structural tests based on what you actually promise, not what you name it. If your offer is drifting toward either one, have it reviewed by an attorney familiar with FTC rules before you launch. See the FTC's guidance on franchises, business opportunities, and investments.
Auto-renewing memberships need clear, upfront terms
If you sell an ongoing membership or subscription that renews automatically, your reliable baseline is federal law that has been on the books for years: the Restore Online Shoppers' Confidence Act (ROSCA) requires you to clearly disclose the material terms including the recurring charge before you bill, obtain the customer's express informed consent, and give them a simple mechanism to stop the charges. Many states layer their own auto-renewal disclosure and cancellation laws on top, and those differ — check your state's.
The FTC's separate "click-to-cancel" amendments, which would have set detailed cancellation mechanics, were struck down by a federal appeals court in 2025. The FTC has since formally restored the earlier, much narrower version of its Negative Option Rule and has opened a new rulemaking on the same problem, so the federal picture is genuinely unsettled — re-check ftc.gov before you build your billing and cancellation flow, and don't rely on any summary (including this one) as the last word. What doesn't change: ROSCA and your state's law never went anywhere, and they are your floor. The practical point survives every version of this rule — if cancelling is meaningfully harder than signing up was, you're inviting chargebacks, complaints, and regulator attention regardless of which rule is on the books that month.
Selling to customers outside the United States
If people in the European Union or United Kingdom buy your digital product, EU and UK value-added tax (VAT) rules generally apply to digital sales to consumers there, based on the buyer's location rather than yours. That's a real obligation, and the mechanics — registration thresholds, which sales count, how your platform's VAT handling affects your own duty to collect — are genuinely complex and outside U.S. law entirely. If a meaningful share of your buyers are outside the U.S., talk to a tax professional who handles cross-border digital sales and check whether your platform already handles VAT for you as merchant of record.
Make your course or product accessible
If people with disabilities can't use your course platform, videos, or downloadable files — no captions, no screen-reader-compatible PDF, no keyboard navigation — you're leaving customers behind and creating the same kind of exposure covered in our guide to when a business website needs to be ADA accessible. Caption your videos, structure your PDFs and slides so a screen reader can follow them, and confirm your course platform itself works with keyboard navigation.
What to do before you launch
Check digital-goods sales-tax rules with the revenue agency of each state where you have real sales volume, and confirm whether your platform collects tax for you as merchant of record.
Write a plain-language license covering personal vs. commercial use, no resale, and your refund policy.
Confirm commercial-use rights for every stock image, font, and music track in your product, and keep the records.
Review your marketing for income or results claims and make sure you have real evidence in hand before you run them.
If you promise to supply buyers with customers, accounts, or outlets alongside a required payment — or let them operate under your brand with your significant assistance — have the offer checked against the FTC's Business Opportunity Rule and Franchise Rule, and your state's versions.
If you run an auto-renewing membership, disclose the recurring charge before billing, get express consent, and make cancellation genuinely easy.
If you sell internationally, ask a cross-border tax professional about VAT.
Caption your videos and check your platform and files for basic accessibility.
Free help exists and it's worth using: the IRS, the U.S. Small Business Administration, SCORE, and your state's Small Business Development Center all offer no-cost guidance, and a CPA or attorney is worth the fee for anything significant.
This article is general information, not legal, tax, or financial advice, and using it doesn't create an attorney-client or accountant-client relationship.
Frequently asked questions
Do I have to charge sales tax on a course or PDF I sell?
It depends entirely on the state where your customer is, and states differ on whether they tax digital products at all, and whether a downloaded file is treated differently from streamed or temporary access. Check each state's own department of revenue site rather than assuming one state's rule applies everywhere, and check whether your selling platform is already collecting as merchant of record.
If I sell through a course platform or marketplace, do I still owe sales tax myself?
Maybe not — many platforms and marketplaces act as merchant of record and collect and remit sales tax under state marketplace-facilitator laws. But this varies by platform and sometimes by state, so verify your specific platform's policy rather than assuming.
Can I let buyers use my template in their own paid client work?
That's your choice to make and spell out clearly in a license — commercial use, resale, and redistribution rights aren't automatic just because someone bought access. State personal-use vs. commercial-use terms explicitly.
Can I feature my best customer's results in my marketing?
You can, but the FTC requires that a testimonial reflect what a typical customer experiences, or that any atypical result be clearly and conspicuously disclosed. A stand-out success story presented without that context can be treated as a deceptive claim. You also need a reasonable basis — actual evidence — for any results claim at the time you make it, not only if you're challenged later.
Does the FTC's Business Opportunity Rule apply to my online course?
Usually not, if you're selling information, training, or coaching alone. The rule applies when you solicit someone into a new business, they make a required payment, and you represent that you or a designated person will provide locations for equipment, provide outlets, accounts, or customers for their goods or services, or buy back what they produce. Promising to deliver clients or done-for-you sales channels is what tends to pull an offer in. If it applies, you must give a disclosure document at least seven calendar days before the buyer signs or pays, and any earnings claim requires a separate Earnings Claim Statement disclosing how many of your buyers actually achieved that result. Because the line is structural rather than about labels, have a borderline offer reviewed by an attorney.
Is the FTC's click-to-cancel rule for canceling subscriptions currently in effect?
No. A federal appeals court struck down the FTC's 2024 'click-to-cancel' amendments in 2025, and the FTC has since restored the earlier, narrower version of its Negative Option Rule and opened a new rulemaking on the issue — so the federal rule is unsettled and worth re-checking on ftc.gov. But the underlying federal law, ROSCA, never went away: it still requires clear disclosure of recurring charges before billing, express informed consent, and a simple way to cancel. Many states also have their own auto-renewal laws, and those vary.
This article is general legal information, not legal advice, and may not reflect the most current law or the law in your jurisdiction. Laws vary by state and change over time. For advice about your specific situation, consult a licensed attorney.
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