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The U.S. Small Business Administration Office of Advocacy has published an article about the status of state tax liability rules for funds received from the Paycheck Protection Program (PPP). The article outlines how each state that implements an income tax has its own revenue code that conforms in some degree to the IRC. Twenty-one states and the District of Columbia are rolling conformity states, meaning they automatically conform to the most current IRC for both individual and corporate income taxes. Taxpayers with forgiven PPP loans in those jurisdictions will exclude the forgiven loan proceeds from taxable income at the federal and state level. Nineteen states are static conformity states, meaning that state lawmakers must vote to change their state’s conformity date. Because of the pandemic, states are hurting for revenue and may have no plans to update their conformity dates to rectify this glitch. Indeed, California has already stated that it plans to tax forgiven PPP loan proceeds.