Joe’s Trucking has operated successfully for 20 years as a registered intrastate carrier, handling dedicated freight for two well-known manufacturers that routinely move goods between San Antonio and Dallas. What started as a single-truck operation by 2020 had grown to 10 trucks, none of which have ever left the state of Texas.

Then the COVID-19 pandemic hit, and one of the manufacturers saw a decline in business. Fortunately, Joe’s Trucking had a friend in Oklahoma City that needed help. Joe’s friend, Steve’s Transport, would drop a trailer in Dallas for Joe’s Trucking to deliver to San Antonio before hauling a loaded unit back to Dallas, where Steve’s Transport would bring it the rest of the way to Oklahoma City.

Joe’s Trucking handled more than 100 loads under the arrangement, but it wasn’t until one of Joe’s Trucking’s vehicles was stopped for a routine inspection that it was learned the company had been operating illegally. Why?

While the fictitious Joe’s Trucking was simply trying to keep its trucks moving and drivers employed, because the company was registered as an intrastate carrier, it didn’t have the legal authority to engage in interstate commerce, which in this example, it was.

The rules of intrastate versus interstate commerce are not always this complicated, but for trucking operations that misregister their fleet, the costs could be significant in terms of Federal Motor Carrier Safety Administration fines and even out-of-service orders.

In our example of Joe’s Trucking, Joe’s is an interstate carrier by FMCSA’s definition because they are moving freight coming from another state. Even though their truck wheels stay in Texas, they would register under Unified Carrier Registration (UCR) because they are participating in interstate commerce. However, because their wheels never leave the state, they would not need to register with International Fuel Tax Agreement (IFTA) or International Registration Plate (IRP). Only when Joe’s Trucking would physically leave the state would IFTA and IRP become relevant.

“Carriers that fail to obtain the appropriate registration can face violations, fines of more than $15,000 per violation and even out-of-service orders resulting in delayed deliveries,” said Mike Henckel, transport editor at J. J. Keller & Associates Inc. “Therefore, carriers must know whether they’re operating in intrastate or interstate commerce, what requirements apply and then ensure they’re always in compliance.”

Defining interstate vs. intrastate carriers

For purposes of FMCSA, the distinction between interstate and intrastate carriers is fairly straightforward. “If you perform trade, traffic or transportation exclusively in your business’ domicile state, this is considered intrastate commerce,” FMCSA declares on its website. Operations become interstate when the vehicle, or the vehicle’s contents, travel in more than one state or between the United States and either Canada or Mexico (or both).  

The vehicle’s contents are a key part of this definition and is what tripped up Joe’s Trucking. Because the load originated in Oklahoma and traveled into Texas, even though Joe’s Trucking’s vehicle never left the state of Texas, it was engaged in interstate commerce and therefore the load was an interstate move.

Carriers registered as interstate require a Department of Transportation (DOT) number as well as a motor carrier (MC) number. Those involved only in intrastate and registered that way may only require a DOT number. If they operate as a for-hire carrier, though, they would also need an MC number.

There are other differences between the two, according to compliance specialists J. J. Keller & Associates. Carriers with interstate authority must adhere to FMCSA’s Federal Motor Carrier Safety Regulations (FMCSRs). About 40 states have adopted FMCSRs for their intrastate rules, while others use only a portion, so carriers operating under intrastate authority only need to check with their local state or a compliance specialist to ensure their operations meet legal standards.

All states and motor carriers must adopt and comply with FMCSA’s CDL provisions (Part 383), drug and alcohol testing (Part 382) and driver training requirements (Part 380), regardless of registration. Also, each state has its own requirements for base-state registration (license plates).

Interstate compliance with FMCSRs falls under FMCSA definitions of what constitutes a commercial motor vehicle. Regulatory specialists can assist carriers in determining which of these definitions, and which specific rules, such as driver qualification and hours of service, apply.

Unified Carrier Registration (UCR)

UCR is required for all interstate for-hire carriers of property or passengers and also for private property carriers. This includes carriers based in Canada or Mexico that operate in the U.S. The registration period runs from Oct. 1 through Dec. 31, J. J. Keller’s Henckel said, and any carrier that conducts even a single interstate movement in a year must register.

The UCR fee structure is based on fleet size. The current fee structure is:

# of vehicles

0-2 vehicles

3-5 vehicles

6-20 vehicles

21-100 vehicles

101-1,000 vehicles

1,001 vehicles and above

IFTA and IRP compliance

International Fuel Tax Agreement (IFTA) and IRP compliance is where interstate versus intrastate matters. Both programs are for interstate carriers operating in the U.S. and Canada and serve as a way to collect fuel taxes (IFTA) and file registration paperwork (IRP) with the various states. Under the programs, carriers need only file and pay fees/taxes with a single state to file with all. Unlike FMCSA’s definition of interstate, though, IFTA and IRP only consider carriers interstate when their wheels physically cross state lines. In the Joe’s Trucking example above, while he would be considered an interstate carrier under FMCSA’s definition, for IFTA and IRP purposes, he remained an intrastate carrier.

IFTA- and IRP-qualified vehicles include a power unit having two axles and a gross vehicle weight or registered gross vehicle weight in excess of 26,000 pounds; a power unit having three or more axles, regardless of weight; or vehicles used in combination when the weight of such combination exceeds 26,000 pounds gross vehicle weight.

According to J. J. Keller, carriers need to track all miles of qualified vehicles, including empty miles and miles accrued when the vehicle is used for personal use or sent to a shop for repair (including any road tests).

Both IFTA and IRP require the following documents/records be kept:

Mileage records

1.      Electronic mileage records (by electronic logging device or GPS unit) data must include:

 Original GPS data.
 Date, time and location of each GPS reading.
Odometer/hubodometer or ECM readings.
Distance between each GPS reading.
Route of travel.
Total trip distance/distance in each jurisdiction.
Vehicle ID number or unit number

2.      Paper mileage records:

Dates of trip.
Trip origin and destination.
Route of travel.
Odometer/hubodometer or ECM readings.
Total trip distance.
Distance traveled in each jurisdiction.
Vehicle ID number or unit number.

Fuel records

IFTA also requires carriers to keep fuel receipts so fuel spend can be tracked (either paper fuel receipts or through electronic means such as from a fuel card vendor). The fuel record must contain:

Date of purchase.
Seller’s name and address.
Number of gallons.
Price per gallon.
Total amount of sale.
Purchaser’s name and address.
Fuel type.
Vehicle number.

In addition, IFTA requires quarterly tax filings on Jan. 31, April 30, July 31 and Oct. 31. IFTA requires carriers to maintain historical archives of records for four years. IRP records must be retained for six-and-a-half years.

For carriers that only occasionally operate as interstate carriers, there is the option of obtaining temporary fuel and trip permits rather than registering for IFTA and IRP. Temporary permit costs vary by state and include limits as to the number of times they can be used. Also, eight states – Connecticut, Indiana, Kentucky, Maine, North Carolina, Pennsylvania, Utah and West Virginia – require separate intrastate fuel permits. Improperly registering commercial vehicles for interstate or intrastate operation can have significant financial consequences for fleets. When additional requirements such as UCR, IFTA and IRP with their varying definitions and requirements are added to the mix, the compliance equation can quickly overwhelm fleet managers. Working with third-party compliance specialists like J. J. Keller & Associates can help fleets remain compliant and up-to-date on the fuel tax payments.