Are all carriers with multiple DOT numbers trying to cheat the system? The short answer is no.
Over the years, the Department of Transportation has been cracking down on carriers or drivers from dropping a bad DOT Number for a new clean record. These carriers are called “chameleon carriers” because they try to blend into new surroundings, hiding themselves from their past negative record.
Another frequently used term is “reincarnated carriers.” They are technically different as they are groups of companies that move assets around to prevent fees or compliance issues, whereas chameleon carriers shut down and start new companies to try and prevent fees and compliance issues.
Chameleon carriers are bad for the trucking industry because many are unsafe operators who disregard hours of service compliance, vehicle or truck maintenance, and/or customer service. There are companies who sometimes use cardboard signs to quickly swap their DOT number and company name while on the road to prevent roadside enforcement.
It has been estimated that chameleon carriers are involved in nearly three times the rate of new carrier severe crashes, which has led the DOT and other organizations to the prevention of reincarnated or chameleon carriers.
But are all carriers with multiple DOT numbers trying to cheat the system? The short answer is no.
According to Adam Galante, a DOT compliance expert at Compliance Navigation Specialists, “What drives people to have multiple DOT numbers are the insurance rates, which are determined by their hauling classification. We see it a lot with farmers who do follow regulations, but haul different items and fall under multiple classifications.”
“A fertilizer hauler contacted us to get another DOT number and instantly we are trained to think they are a chameleon carrier, but that is not the case. He can have different entities, but he has to keep the equipment separate. It’s when you start sharing equipment that things can get ugly, unless there is a proper lease agreement to share it.”
“For instance, the fertilizer hauler may want two DOT numbers. One for when he picks up fertilizer for his farm operation and another for picking up and delivering fertilizer to other distributors. So, if he is picking it up for his own farm use as well as delivering to other distributors needing fertilizer, he would need to separate the entities because they would own a private property farm as one entity and a commercial operation as another entity. This is significant because a farm and a commercial operation wouldn’t operate the same and insurance rates would be different as well.”
When is it legal to have more two or more DOT numbers?
The FMCSA’s policy is to assign a unique USDOT identification number to each person required to identify themself with FMCSA and remain assigned to that person forever under 49 U.S.C. 13902, 31134 and 49 C.F.R. 390.19T or 390.200T.
According to the DOT, “a person includes an individual, corporation, partnership, or other business organization as authorized by state law. Each separate and distinct person must have separate registration.”
For corporations, partnerships, and other business organizations, the USDOT number will remain the same when there is a change in company officials, address or other demographic information, and the corporation, partnership, or other business organization will continue operations as the same legal person/entity.
The only time a company will need multiple DOT numbers is if they operate two or more separate commercial driving entities.
In other words, the company needs to have separate entities but have familial ownership. This can happen due to a company acquisition or a large company that has multiple divisions.
“For example, there is a company who has one tractor trailer, bus transportation, and a pickup to haul empty containers from the ports,” said Adam Galante of CNS. “These are considered three completely different operations. You do not want to put these on the same insurance policy, which is why we separate them as separate entities.”
Many others choose the route of having a single DOT number parent company where the parent company has the DOT number, appropriate insurance, and all subsidiaries are listed as per insurance regulations. They have corporate leases between the parent company and subsidiaries that cover the ownership of the equipment, addressing company vehicles only, not owner-operators.
Everything they have runs under the parent company regardless of which entity the equipment is registered to.
Whether you choose to get one or two DOT numbers, you do need to follow proper procedures so that you can operate your vehicle legally.
Are USDOT numbers transferable?
According to a recent Transport Topics article, “the rise in acquisitions ultimately is good since it gives small fleet owners a way out besides bankruptcy and puts their business in a position to scale up with another company.” This trend is likely to continue given the rise in insurance costs.
However, understanding what happens to DOT numbers during an acquisition or merger is important.
To answer the question, no, USDOT numbers are not transferable but operating authorities, or MC numbers, are transferable. This is because USDOT numbers are a unique identifier to track the safety history of a specific carrier. Transferring a USDOT number would have the effect of transferring the entire safety history of one entity to another separate entity.
This means that if a merger or acquisition creates a new legal entity, a new USDOT number will be required as well.
Questions about multiple DOT numbers can come up here because there is safety history and experience associated to the DOT number, which lowers insurance rates. When the companies merge and get a new DOT number, this is going to increase insurance rates because there is naturally higher insurance for a new entrant who has no safety history associated to the DOT number.
In some cases, you may be able to transfer the drivers’ qualification files (DQ files) from the merged or acquired entity to the gaining or new entity.
If drivers do not need to apply for a role at the new company, the DQ files from the previous DOT number can be accepted. However, a note should be put into the DQ file specifying the date of the acquisition or merger to indicate why the DQ files have a different motor carrier identified.
It is also important to note that the transferred DQ files should be audited by a trained DOT compliance expert to make sure the transferred files meet the DOT requirements, as this new entity is also required to have a new entrant audit in the next 6-18 months of operation.
If you’ve got the vision and desire to start a trucking company, now is the time to make that vision reality. Starting any new business can be expensive and time-consuming. You don’t want to get overwhelmed by the paperwork and documentation before you even pick up a load.
That’s where CNS can help! As a leader in the trucking industry, we’ve helped many trucking startups and know what makes new companies successful. We’ve outlined the basic steps you’ll need to take to start a trucking company.
Our specialists can help you avoid getting bogged down in forms, because we take time to learn about your operation and help you become DOT compliant from the start. We won’t over-sell unneeded items or services that don’t ultimately help you get your business on the road.
Let us help you get started.
Step 1: Make a Detailed Financial Plan
A solid business plan will list expenses and revenue expected in your business. Be sure to include your own salary. Costs involved in a trucking startup include tractors, trailers, licensing, and registration costs. Also include the cost of insurance, and data tracking software and services.
The U.S. Small Business Administration website has downloadable templates to create your own business plan.
Step 2: Decide What Kind of Company You Want To Form
You may want a sole proprietorship, a partnership, or a limited liability company. Each of these has pros and cons, which vary by state.
To own and run a private company in the United States, you’ll need to form a limited liability company (LLC). This is a business structure that combines pass-through taxation (like a partnership or sole proprietorship), with the limited liability of a corporation.
CNS can prepare and file your LLC application with your home state. Or if you want to start a partnership or sole proprietorship, click here.
Step 3: Obtain a Federal Employer Identification Number (EIN)
This unique nine-digit number gets assigned to businesses in the United States by the Internal Revenue Service. Use this number to file your business tax returns.
CNS can obtain your EIN on your behalf. Click here to begin obtaining a Federal EIN.
Step 4: Become Compliant with Trucking Safety Regulations
- Obtain a USDOT Number
First be sure you even need a USDOT number. Obtaining a USDOT Number can be confusing and costly. Here’s where CNS can help by getting your number quickly and accurately. Click here to learn more.
- Obtain a Motor Carrier Operating Authority
Companies are required to have interstate operating authority (MC Number) in addition to the DOT Number if they do any of the following tasks:
- Operate as for-hire carriers (for fee or other compensation)
- Transport passengers in interstate commerce (or arrange for their transport)
- Transport federally regulated commodities in interstate commerce (or arrange for their transport)
CNS can file for your MC Number at the same time we apply for your DOT Number.
- File a BOC-3
A BOC-3 is a required United States filing that activates your Motor Carrier Authority. This filing assigns legal agents in the event court papers ever need to be served to your company by an outside state. It is required before federal operating authorities can be granted in the U.S.
CNS, unlike many of our competitors, does not charge an annual fee for a BOC-3 filing.
- Know the Heavy Use Tax (HUT) States
You may need to apply for further credentials if your company drives in the following states:
- New York
- New Mexico
- Plan to File Heavy Highway Use Tax (2290)
A trucking startup needs to be aware of special tax codes and procedures in accordance with State, District of Columbia, Canadian, and Mexican law. When a vehicle has a taxable gross weight of 55,000 pounds or more, the company has to electronically file a HVUT Form 2290.
Once this is filed, you will need to get a stamped copy of your Schedule 1. Companies are required to file all taxable highway motor vehicles registered in your name during the tax period when the truck first operated.
CNS can file your Schedule 1 with the IRS and provide you a stamped E-File copy. Click here to learn more.
- Secure a Unified Carrier Registration (UCR)
The Unified Carrier Registration (UCR) program requires ALL carriers (private, exempt, or for hire) to register their business with a participating state and pay an annual fee that is based on the size of their fleet.
Brokers, freight forwarders, and leasing companies also are required to register and pay a fee, unless they are also operating as a motor carrier.
CNS can complete your UCR filing after you obtain your DOT number. Click here to learn more.
- Get an International Fuel Tax Agreement (IFTA) Sticker
This agreement is between the lower 48 states and Canadian provinces and it simplifies reporting of fuel use by motor carriers operating in multiple jurisdictions. Alaska, Hawaii, and Canadian territories do not participate.
An operating carrier with IFTA receives an IFTA license and two decals for each qualifying vehicle. The carrier files a quarterly fuel tax report. This report determines the net tax or refund due and redistributes taxes from collecting states to states where it is due.
- Obtain an International Registration Plan (IRP) Sticker
This registration gives reciprocity between the United States and Canada without the need for additional registrations. Under this Plan, only one license plate and one cab card is issued for each fleet vehicle.
Step 5: Become Compliant with the FMCSA
Great job! Taking these steps gives you DOT and Operating authority. Now you need to become compliant with the FMCSA. These items need to be maintained through the year.
CNS has reliable, cost-effective packages that keep you compliant and up-to-date.
Step 6: Obtain the Correct Insurance
Different types of insurance are available and often required to cover certain aspects of your trucking company.
- Primary Liability – After applying for an MC Number, you will need to post liability insurance with FMSCA. You must carry at least $750,00 in primary liability coverage to cover damages or injuries from at-fault accidents.
- Cargo Insurance – This insurance covers damage to the freight and/or theft.
- Physical Damage – Provides coverage for truck damage when you are not liable.
- Non-Trucking Use (Bobtail) – Covers liability in accidents that happen when you’re not hauling a load for someone else.
CNS partners with premiere truck/passenger insurance agencies to obtain the best coverage at affordable rates. Click here to learn more.
Step 7: Use a Driver Qualification File (DQF) Service
Trucking companies need to keep impeccable records in the event of an audit. Physical or electronic driver files allow you to pull an MVR report, look at previous employer inquiries, PSP reports and more.
CNS has solutions to keep your Driver Qualification Files up to date with regulations and ready to help you pass an audit. All of our driver files are monitored by actual DQF specialists to ensure documents don’t expire. We communicate personally about soon-to-expire materials to avoid computer overlooks. Click here to learn more.
Step 8: Join the Mandatory Drug and Alcohol Consortium
Anyone holding a Commercial Driver’s License needs to have a pre-employment drug test and be enrolled in a DOT drug and alcohol consortium.
CNS offers a low-cost, DOT-compliant service that covers DOT random testing through the year. Our service gives you a secure portal to track test results. We also have personal representatives to call when you have questions. Click here to learn more.
Step 9: Install a Compliant Electronic Logging Device
Per a 2017 Electronic Logging Device mandate, non-exempt carriers are required to install an FMCSA-registered and compliant electronic logging device.
Today’s ELDs can actually help you grow your business. ELDs offer many fleet management features like diagnostic tools and advanced reporting. With their reports, you can maximize your fleet efficiency and simplify your operations.
Step 10: Make Your Trucking Startup a Reality
We at CNS are excited for your new venture to become reality. We’re here to help you navigate the path towards starting a trucking company.
Our services and compliance specialists are on hand to get you up and running as quickly as possible.
Waived through June 30
Due to the effects of COVID-19, the US Department of Transportation will not enforce certain licensing and medical certification renewal regulations for drivers whose credentials expired on or after March 1, 2020.
The Federal Motor Carrier Safety Administration issued a waiver Tuesday extending commercial driver’s license and commercial learner’s permit validity until June 30 for those that expire on or after March 1. CLP holders will not be required to retake the general and endorsement knowledge tests if utilizing the waiver.
The notice also waives the requirement for drivers to have a medical exam or certification, as long as the drivers have proof of a valid medical certification that was issued for at least 90 days and expired on or after March 1.
The waiver follows President Trump’s national emergency declaration on March 13 in response to the COVID-19 pandemic. FMCSA says a number of states have more employee absences than normal or closed offices, making it difficult for commercial drivers to renew their licenses. Additionally, FMCSA notes many medical service providers have canceled regularly scheduled appointments, not allowing drivers to get appointments for DOT physicals with medical examiners.
In addition to the above waivers, the notice also:
- Waives the requirement that CLP holders wait 14 days to take the CDL skills test.
- Waives the requirement that truckers provide states with a medical examiner’s certificate, as long as they have proof of a valid med cert that expired on or after March 1.
- Waives the requirement that states change drivers’ med cert status to “not certified” upon the expiration of the certificate if it expires after March 1.
- Allows FMCSA to continue to recognize the validity of Canadian and Mexican commercial licenses when those jurisdictions issue similar notices extending license validity
Ads for UCR Registration Fees and pricing scams
You may already be getting organized for 2020, and that is commendable, but one task you may want to put on hold is your 2020 UCR (Unified Carrier Registration).
Since the fee schedules have just been announced, they will be officially released in the next few days and any companies attempting to collect your registration fees now may be a scam.
The UCR Fee Schedules have just been announced
The Federal Motor Carrier Safety Administration (FMCSA) announced 2020 fees on February 4, 2020 and will be officially releasing the fee schedule sometime in the following days.
At that time, the 2020 UCR Registration fees will be officially established. Even so, the UCR Board will recommend delaying enforcement for three months from the start of the registration period.
UCR Renewals Currently Advertised Could be a Scam
Depending on when you are reading this article, you should be cautious of ads claiming to renew your UCR. It is possible they are a scam. This applies every year, whether it be 2020, 2021, and so on.
The start of the UCR registration period was delayed in 2020 and could be the case for 2021 and the following years. Many companies send out email advertisements claiming to offer UCR Registration or Renewal. This could be a scam, depending on when the fee schedules were released, if they have been released at all.
For 2020, the UCR Fee Schedule has just been announced and will be official once posted in the Federal Register. In the future, just be sure to confirm with Compliance Navigation Specialists to confirm whether the pricing has been released.
As we mentioned above, avoid providing information or funds to any person or company claiming they can renew your UCR at this point. Unfortunately, these attempts to collect money before the fee levels are officially released are scams. We would not want any carrier in our industry to be harmed or lose money on a scam attempt.
Fees may be lower than previous years
In many cases the FMCSA proposes reductions in the annual registration fees, so it is possible that prices will be lower than in previous years, should that proposal go through.
For 2020, our UCR filing fees will remain the same as 2019.
Unified Carrier Registration (UCR) filing
We are a trustworthy UCR Filing Service
After the UCR fees are released, all interstate motor carriers will need to update registrations before the deadline. So, while you should wait until the official fee levels are released, plan to use a filing service that knows our industry.
This is where Compliance Navigation Specialists can help you. Our UCR filing service processes your new UCR or your renewal, quickly and accurately. We will file the paperwork and determine the fees, so you can stay focused on your vision for your carrier business.
Visit our UCR filing page to find out more about which states will need a UCR and how we can help you file or renew your UCR accurately.
The Federal Motor Carrier Safety Administration (FMCSA) recently issued a proposed rule that would reduce Unified Carrier Registration (UCR) fees for 2020 and 2021.
The reduction in annual UCR fees applies to motor carriers, private motor carriers of property, brokers, freight forwarders and leasing companies that are paying fees to their respective state.
What is the Unified Carrier Registration fee reduction?
The UCR fee reduction would be for 12.82% in 2020 and 4.19% in 2021, based on the rates paid in 2018, however the Unified Carrier Registration vice chairman of the board of directors stated that the rates are expected to decrease by another 1-2%.
As an example, a carrier with a fleet of two or more trucks paid $69 in 2018 and $62 in 2019, but after the fee reduction, they would only pay $60 in 2020 and $66 in 2021.
How are the UCR fees calculated?
Fees are calculated based on collections of the second year prior, which would be 2018 right now. Based on federal law, requests for fee adjustment are required when the annual revenue exceeds the maximum allowed and the board estimates that by the end of 2019 the total revenue will exceed the maximum by $3.08 million.
If there are excess funds after other costs are covered, such as payments to the states and administrative costs, they are retained and fees for the following year are reduced.
Based on the board’s research, the fee reduction includes a reduction in the amount of the administrative cost allowance from $3.5 million to $3.2 million for the 2020 and 2021 UCR Agreement registration years. They have also determined that the administrative cost allowance needed for the 2020 and 2021 registration period should be $3.2 million for each registration year.
The agency reviewed the board’s formal recommendation and concluded that its projection of the total revenue received for registration year 2018 is acceptable.
We offer many different services related to licensing, including assisting with your Unified Carrier Registration (UCR).
If you have any questions, call (888) 260-9448 or email at firstname.lastname@example.org.