Transportation Licensing Compliance Guide
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Whether you are a principal of a transportation corporation, a professional driver, or new to the field, you will face certification and licensing requirements at every level of your career. Adhering to licensing requirements is key to maintaining your legal authority to transport goods. Beyond that, full compliance demonstrates that you have the transportation skills and judgement to ensure the safe movement of passengers and cargo. Failing to observe transportation industry requirements can result in state imposed penalties and even denial, revocation, or suspension of your license.
The following guide contains an educational overview of transportation licensing requirements. Contact Harbor Compliance today to help you simplify the professional licensing process.
Overview of Motor Carrier License Requirements
Businesses that provide motor carrier or freight brokerage services are required to hold a number of registrations and licenses before operating. Licenses are issued at the federal and state level in most cases, but state requirements often vary.
Before applying for a license, new carriers should register with the secretary of state. Depending on the desired type of business entity, either articles of incorporation or articles of organization should be filed. To learn more about this process, take a look at our How to Start Your Business guide.
Federal motor carrier registration requirements are carried out by the Federal Motor Carrier Safety Administration (FMCSA). The FMCSA oversees two separate carrier registrations: United States Department of Transportation (USDOT) number registration and authority to operate (MC Number) registration. In addition to this, carriers must designate process agents within 90 days after applying for operating authority.
DOT Number Registration
Interstate carriers that transport passengers or commercial cargo are typically required to apply for a DOT number, and 32 states also require intrastate carriers to apply for a DOT number: Alabama, Alaska, Arizona, Colorado, Connecticut, Florida, Georgia, Indiana, Iowa, Kansas, Kentucky, Maine, Maryland, Michigan, Minnesota, Missouri, Montana, New Jersey, New York, Nebraska, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, Texas, Utah, Washington, West Virginia, Wisconsin, and Wyoming. Carriers that are unsure about their liability to register can use the FMCSA “Do I need a DOT number?” resource to check.
Initial DOT number registration is processed online through the FMCSA’s Unified Registration System (URS). After receiving a DOT number, carriers and brokers must perform routine updates to their registration when information changes. Biennial updates are also required of all registrants regardless of whether or not information changed.
Operating Authority (MC Number)
Carriers and brokers that transport or facilitate the transport of passengers or cargo across state lines are generally required to apply for FMCSA operating authority. Operating authority allows carriers and brokers to transport various cargo, and companies that provide service in more than one cargo classification may need to apply for additional operating authorities. The type of transportation Operating Authority will impact that type and level of insurance that is required by FMSCA. Common types of operating authority include:
- Motor Carrier of Property (except household goods)
- Motor Carrier of Household Goods
- Broker of Property
- Broker of Household Goods
- United States-based Enterprise Carrier of International Cargo (except household goods)
- United States-based Enterprise Carrier of International Household Goods
- Freight Forwarder of Property (except household goods)
- Freight Forwarder of Household Goods
- Motor Passenger Carrier
- Non-North American-Domiciled Motor Carriers
New businesses applying for their first operating authority can use the Unified Registration System, while businesses with existing registrations should use the legacy registration system to update or add to their registration. Prior to registration, carriers and brokers need to meet insurance requirements. There is a $300 fee for permanent authority and a $14 fee for registration name changes.
Designation of Process Agents
Before receiving operating authority, motor carriers of property or passengers must appoint a process agent in each state they are authorized to operate in. Process agents act as representatives of a company and receive legal documents on the carrier’s behalf. Freight brokers are also required to appoint an agent in each state where they have an office and in each state where they write contracts. Carriers and brokers should use the FMCSA’s Form BOC-3: Designation of Agents for Service of Process to appoint agents.
Hazardous Materials Registration
Additional credentials are needed for the transportation of hazardous materials.
Heavy Vehicle Use Tax (HVUT)
HVUT is paid to the IRS under the owner or registrant of each highway motor vehicaly with a GVW or combined GVW of 55,000lbs+. Carriers with 25 or more trucks must file Form 2290 electronically.
State Administered Registrations
Motor carriers are subject to a number of state level registrations, often involving multiple state agencies. All states require interstate/out-of-state carriers to hold a Unified Carrier Registration Agreement (UCRA) license, International Registration Plan (IRP) registration, International Fuel Tax Agreement (IFTA) registration, and a commercial driver’s license (CDL). In addition to the standard requirements, some states also offer temporary permits or additional tax registrations for certain carrier types. Intrastate/in-state carrier requirements vary greatly, but most are not subject to the UCR, IRP, or IFTA.
Unified Carrier Registration (UCR)
The Unified Carrier Registration is an annual registration required for most interstate carriers. Although some states (Arizona, Hawaii, Florida, Maryland, Nevada, New Jersey, Oregon, Vermont, Wyoming, and Washington D.C.) are not participating in the UCR, carriers from these states that operate in participating states must often carry a registration. Fees range from $76 for up to two vehicles to $73,346 for companies with more than 1,000 vehicles. State specific applications are available, but carriers from any state can use Indiana’s online UCR registration system to apply.
International Registration Plan (IRP) and International Fuel Tax Agreement (IFTA)
IRP and IFTA are separate reciprocity agreements that consolidate registration and reporting requirements across member jurisdictions. These agreements mean that carriers only need to register and report in their base state, while fees and information are shared with other states where the carrier operates. IRP and IFTA generally apply to paid interstate transporters of passengers and property with a unit weight of 26,000 pounds or more.
Under the International Registration Plan, carriers must register (usually with the department of transportation) in their base state prior to conducting interstate business. After applying for and receiving an apportioned registration, carriers must track and report the mileage driven in each jurisdiction. IRP registration periods vary by state, but all jurisdictions have an annual reporting period from July 1 to June 30.
The International Fuel Tax Agreement streamlines the process for reporting fuel used by interstate carriers. Carriers should register for the IFTA in their base state by filling out an application with the department of revenue. After registration carriers are required to submit quarterly reports on fuel use in the jurisdictions travelled across. In addition to the reporting requirement, IFTA credentials need to be renewed periodically.
Commercial Driver’s License (CDL)
Before operating a commercial motor vehicle, drivers in all states are required to hold a commercial driver’s license. Each driver must obtain a CDL in their home state with any special endorsements required for the vehicles that will be driven. Application and testing requirements vary by state, but most states require intrastate carriers to be at least 18 years old and interstate carriers to be at least 21. Common requirements for a CDL include: knowledge tests, skills tests, medical qualification, and a background check.
Temporary permits are generally costly, but sometimes necessary, for short trips.
A temporary permit will be needed for oversize (by dimensions or weight) vehicles. If you will be traveling to a state in which the vehicle is not registered under IRP, a Trip Permit is needed. Likewise, a Fuel Permit is needed when traveling to a state under which the vehicle does not have an IFTA decal and license. Temporary Mileage Permits are needed in Arizona, Kentucky, and New York.
Other Permits and Registrations
In addition to the above listed registrations, some states also require motor carriers to apply for permits or supplemental tax registrations. California, for instance, requires for hire carriers to hold a motor carrier permit before conducting business in the state. Intrastate carriers in Pennsylvania must register for motor carriers road tax before transporting within the state, and vehicles with a weight of 55,000 pounds or more must often register for heavy vehicle use tax.
Apportioned Registration - A registration that grants carriers the authority to operate in multiple states. Apportioned registrations provide a license plate, cab card, and stickers to denote the multi state authority.
Base State - A carrier’s principal state of business with regard to Unified Carrier Registration.
Commercial Driver's License (CDL) - The federal government requires drivers to possess a CDL to drive certain types of commercial motor vehicles in the U.S. The type of vehicle operated dictates CDL classification (Class A, B, or C).
Freight Broker - Facilitates the transport of goods through a trucking company. Sometimes trucking companies act as brokers if they are asked to haul freight but don’t have trucks available. They then subcontract the hauling to another company for a commission.
International Fuel Tax Agreement (IFTA) - IFTA is an agreement between the lower 48 states and Canadian provinces to simplify reporting of fuel use by motor carriers that operate in more than one jurisdiction.
International Registration Plan (IRP) - The IRP is a registration reciprocity agreement among states of the United States, Washington, D.C. and provinces of Canada providing for payment of apportionable fees on the basis of total distance operated in all jurisdictions.
Operating Authority (MC Number) - In general, companies that transport passengers in interstate commerce or transport federally-regulated commodities owned by others are required to have interstate a MC number in addition to a DOT number.
Process Agent - A representative who receives service of process on behalf of carriers in states where the carrier is authorized to operate.
Reporting Period - The IRP designates July 1st through June 30th as the annual period of reporting for mileage driven in member jurisdictions.
American Trucking Associations (ATA)
National advocacy group with affiliate organizations in 50 states.
America’s Independent Truckers’ Association
Serves independent owner operators and small to medium sized fleet owners.
Federal Motor Carrier Safety Administration (FMCSA)
The FMCSA is a branch of the U.S. Department of Transportation that supports the development of safety standards for motor carriers and develops standards for licensure and registration.
National Association of Small Trucking Companies (NASTC)
Association for small trucking companies that provides resources and lobbying efforts for the small trucking company community.
National Truckers Association (NTA)
The NTA serves as a resource and advocate for members of the trucking industry.
Owner-Operator Independent Drivers Association (OOIDA)
Represents the interests of independent owner-operators and professional drivers on all issues that affect truckers.