1. (1) Purpose. This rule establishes the methodology for calculating net new jobs under OAR 123-670-0070 when a taxpayer has undergone a merger, conversion, reorganization, consolidation, or acquisition during or between the measurement periods. The purpose of this rule is to ensure that employment transferred through a transaction is not counted as net new jobs, and that the credit is available only where employment has genuinely increased above the combined pre-transaction baseline.

2. (2) Applicability. This rule applies to any taxpayer that, during or between the baseline period and the current period as defined in OAR 123-670-0070(2), experienced one or more of the following events affecting its covered employment:

   1. (a) A merger in which the taxpayer is the surviving entity;
   2. (b) An acquisition of all or part of another entity's business operations, assets, or employees;
   3. (c) A consolidation in which the taxpayer is the resulting entity;
   4. (d) A conversion of the taxpayer's legal form that results in a change of employer identity for covered employment purposes; or
   5. (e) Any other transaction or reorganization that results in the taxpayer employing individuals who were previously covered employees of another taxpayer, where that taxpayer shares a predecessor/successor relationship with the taxpayer as defined in OAR 123-670-0010(14).
3. (3) Internal Reorganizations. A reorganization that changes only the legal form or organizational structure of the taxpayer without resulting in any change in the underlying business operations or covered employment is not subject to this rule. Examples include a conversion from a partnership to a limited liability company or a change in corporate structure where all employees remain employed by the same operating entity.

4. (4) Predecessor/Successor Framework. When an event described in section (2) of this rule occurs, the following principles apply:

   1. (a) Event occurring before the baseline period. If the event was completed before the start of the baseline period, both the baseline period and the current period reflect the combined taxpayer’s covered employment. No adjustment is required under this rule. The taxpayer calculates net new jobs under OAR 123-670-0070 using its own business records for both periods.

   2. (b) Event occurring between the baseline period and the current period. If the event was completed after the end of the baseline period but before the start of the current period, the taxpayer must adjust the baseline period calculation to include the covered employment of the predecessor taxpayer or acquired portion for the baseline period. The adjusted baseline period average annual covered employment is calculated by:

      1. (A) Calculating the taxpayer's own average annual covered employment for the baseline period using its own business records; and
      2. (B) Adding the average annual covered employment of the predecessor business or acquired portion of the business for the baseline period, expressed as the average monthly qualifying covered employee count calculated using the predecessor's business records obtained by the taxpayer, in accordance with OAR 123-670-0070(3).

   3. (c) Event occurring during the current period. If the event was completed during the current measurement period, the taxpayer must:

      1. (A) Include in the current period monthly qualifying covered employee count all covered employees, including those transferred from the predecessor business, from the date of the transaction through the end of the current period, in accordance with OAR 123-670-0070(3); and
      2. (B) Adjust the baseline period calculation to include the average annual covered employment of the predecessor business or acquired portion of the business for the baseline period, expressed as the average monthly qualifying covered employee count calculated using the predecessor's business records obtained by the taxpayer, in accordance with OAR 123-670-0070(3).
   4. (d) Event occurring during the baseline period. If the qualifying transaction was completed during the baseline period, the taxpayer must include in the baseline period monthly qualifying covered employee count all covered employees, including those transferred from the predecessor taxpayer, from the date of the transaction through the end of the baseline period, using the predecessor's business records obtained by the taxpayer.

5. (5) Partial Acquisitions. If a taxpayer acquires only a portion of another business’s operations (i.e., a single division, product line, or group of employees) the predecessor/successor framework applies to the acquired portion only. The taxpayer must:

   1. (a) Identify the covered employees transferred as part of the partial acquisition;
   2. (b) Obtain business records from the predecessor business sufficient to calculate the average annual covered employment of the acquired portion for the applicable measurement period; and
   3. (c) Include the acquired portion's covered employment in the baseline period calculation as provided in section (4) of this rule.
6. (6) Taxpayer Responsibility for Predecessor Records. The taxpayer is responsible for obtaining business records from the predecessor business sufficient to support the adjusted baseline calculation required under this rule. If the taxpayer is unable to obtain the records, the taxpayer must notify OBDD at the time of application and describe the efforts made to obtain such records. OBDD may, in its discretion, accept alternative documentation or estimation methodologies where the taxpayer demonstrates that predecessor records are unavailable through no fault of the taxpayer. OBDD's acceptance of alternative documentation does not waive the taxpayer's attestation obligations or the Oregon Department of Revenue’s authority to audit.

7. (7) Attestation. A taxpayer subject to this rule must include in its application an attestation, as part of the general attestations required under OAR 123-670-0030(5)(f), that:

   1. (a) The taxpayer experienced an event described in section (2) of this rule during or between the measurement periods;
   2. (b) The adjusted baseline period calculation includes the covered employment of the predecessor business or acquired portion as required by this rule;
   3. (c) The net new jobs reported in the employment and wage worksheet reflect organic job creation and not employment transferred, acquired, or otherwise consolidated through the event; and
   4. (d) The predecessor business records used to calculate the adjusted baseline are accurate and were obtained from reliable sources.
8. (8) OBDD Review. OBDD may request additional documentation from a taxpayer subject to this rule as part of the application review process, including but not limited to transaction documents, predecessor payroll records, and records demonstrating the scope of the acquired portion of a business in the case of a partial acquisition.

Statutory/Other Authority

ORS 285A.075

Statutes/Other Implemented

Oregon Laws 2026, Chapter 142 & Oregon Laws 2026, Chapter 50

History

OBDD 9-2026, temporary adopt filed 06/02/2026, effective 06/05/2026 through 12/01/2026