Motor Carrier Authority refers to the legal permission granted by the Federal Motor Carrier Safety Administration (FMCSA) to operate as a motor carrier or trucking company in the United States. This authority is necessary for any company or individual planning to transport goods or passengers using commercial motor vehicles across state lines.
The process of obtaining motor carrier authority involves completing an application, paying the appropriate fees, and complying with various federal and state regulations. This includes but is not limited to, obtaining a USDOT number, securing insurance, appointing a process agent, and implementing an alcohol testing program. Additionally, motor carriers must undergo compliance reviews and may be subject to safety audits to ensure they are operating safely and in compliance with federal regulations. Having motor carrier authority and receiving an MC number is crucial for companies in the trucking industry as it allows them to legally operate and provide their services to customers.
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Who needs MC trucking authority?
The entities that require MC trucking authority include motor carriers and freight brokers who transport freight across state lines.
Carriers, in this context, refer to companies or individuals that transport goods or passengers for hire using commercial motor vehicles. These carriers must obtain MC trucking authority before operating as common carriers, which means they transport goods for the general public.
Freight brokers, often referred to as intermediaries, connect shippers with carriers. They do not personally transport goods, but they help arrange transportation services. Freight brokers must obtain MC trucking authority to engage in this activity.
Who does not need MC authority?
There are certain circumstances in which carriers or freight brokers are exempt from obtaining MC authority. One such exemption applies to intrastate carriers who exclusively operate within the borders of their own state and do not engage in any interstate transportation. These carriers do not require MC authority as they are solely focused on serving the transportation needs within their state.
Another exemption applies to private fleets. These fleets are owned and operated by businesses exclusively for their own goods transportation needs. Since private fleets do not transport goods for the general public, they are not required to obtain MC authority.
There are also specific situations where MC authority is not required for carriers. For instance, carriers transporting non-regulated cargo, such as certain exempt commodities, may not need MC authority. Additionally, carriers operating exclusively within a designated commercial zone may be exempt from obtaining MC authority.
Is the MC Number and USDOT Number the Same?
The MC Number and USDOT Number are not the same, although they are both important for carriers operating in the trucking industry.
The USDOT Number is a unique identifier assigned by the Federal Motor Carrier Safety Administration (FMCSA). It is required for all commercial vehicles involved in interstate or intrastate commerce, regardless of the type or size of the vehicle. This number helps track a carrier's safety record and compliance with federal regulations.
On the other hand, the MC Number is specific only to carriers involved in interstate operations. Also, brokers require an MC number but do not need a USDOT number.
While both the MC Number and USDOT Number serve as identifiers for trucking companies, they aren’t both required for all commercial vehicles.
MC Authority Application Process
The application process for obtaining operating authority in the motor carrier industry can be a complex and time-consuming task. The entire process can take anywhere from 20 to 60 business days, depending on the specific circumstances. Applying for motor carrier authority requires meeting certain requirements and submitting the necessary documents and fees. To ensure a smooth application process, it is important to follow these steps diligently.
Step 1: Create a Business Entity
To apply for your MC authority, the FMCSA will consider your cargo type, company type, and more. This is why the first step is to obtain your Employer Identification Number (EIN) from the IRS and establish yourself as an official business entity. Carriers and brokers must also be approved for liability and cargo insurance coverage. This is crucial because, without coverage, you cannot proceed with the FMCSA registration process.
Step 2: Apply for Your USDOT and MC Number
The Unified Registration System is used to apply for your USDOT and MC Number, replacing several older forms and creating a single online registration system. To obtain your DOT number, proceed to the Unified Registration System portal and follow the instructions. You cannot proceed with your MC authority application until you’ve obtained your DOT number.
Once you've obtained your DOT number, you can start your MC authority application. Gather your truck information, including VIN, year, weight, etc., incorporation details, and license plates (if applicable). Keep in mind there is a $300 non-refundable filing fee.
Step 3: File BOC-3 Paperwork
BOC-3 stands for Blanket of Coverage and is a legal document that designates a process agent in each state where a trucking company operates. This process agent acts as the company's representative for important legal matters and is responsible for accepting legal and court documents on behalf of the company.
To file BOC-3 paperwork, you will need to provide the necessary information about your designated process agent, including their name, contact information, and the states where they will be operating on your behalf. It is important to ensure that the process agent is willing and able to fulfill these responsibilities.
Step 4: File Your Universal Carrier Registration (UCR) Permit
The UCR permit serves as a verification of active insurance coverage. It ensures that your operating authority is up-to-date and valid in the states you operate in.
Your MC number and DOT number are required for this step. Luckily you should have already secured liability and cargo insurance by this point in the process. However, this is still an important part of the process.
Step 5: Paying the Heavy Vehicle Use Tax (HVUT)
HVUT is an annual tax assessed on all heavy vehicles operating on public highways. This tax is essential for maintaining compliance with federal regulations and ensuring the smooth functioning of the trucking industry.
To pay HVUT, you will need to file Form 2290, also known as the Heavy Highway Vehicle Use Tax Return, with the IRS. This form requires you to provide information about your vehicles, such as the VIN (Vehicle Identification Number) and gross weight.
The HVUT payment is based on the weight of your vehicle, what cargo you hauled, and how far you hauled it. The funds collected through HVUT are used for various transportation-related purposes, including the maintenance and construction of highways.
Remember, paying HVUT is a vital step in maintaining your motor carrier authority and ensuring compliance with federal tax regulations. Also, you cannot register for IRP (International Registration Plan) until you have submitted your form 2290.
Step 6: Register for an International Registration Plan (IRP)
Carriers must register for an International Registration Plan (IRP), which is an agreement among 48 states and Canada. This allows carriers to register their vehicles in one location and pay apportioned license fees to operate in other jurisdictions. The fees vary based on the amount of time operated in each jurisdiction and can range from $1,500 to $2,000 per vehicle.
By registering for IRP and obtaining apportioned plates, your trucking company will have the necessary authorization to operate across multiple jurisdictions. This streamlines the process and ensures compliance with regulations in each state.
Step 7: Set Up an International Fuel Tax Agreement (IFTA) Account
IFTA is a similar agreement between 48 states and Canada for collecting taxes on fuel use. Quarterly returns must be filed in your home state to remain compliant with IFTA. Other states may require additional permits in addition to an IFTA license. To be certain all regulations are being met, familiarize yourself with the rules of any state you will do business in.
Step 8: Enroll in a FMCSA Drug and Alcohol Testing Program
Once you have your MC authority, DOT number, and permits, you need to complete one more step. The FMCSA mandates all CDL drivers in your organization to join a drug and alcohol testing program. The FMCSA and USDOT have set rules for testing, substances, and frequency. The FMCSA provides instructions on staying compliant with their drug and alcohol testing requirements.
Ready to Set Up Your MC Authority?
In conclusion, obtaining MC trucking authority is vital for motor carriers and brokers in the transportation industry. This authority signifies compliance with federal regulations and ensures the safety and integrity of operations.
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It is important to note that maintaining active operating authority and adhering to federal regulations is essential for remaining in business.
If you have additional questions about getting your own operating authority or need help with the process, click here!