A few weeks ago I got a call from the owner of a hot shot service in Alberta. He read my April column about the Full Reciprocity Plan, or FRP, and had a question.
FRP streamlines the International Registration Plan
It eliminates any provisions related to estimated distance.
Instead, fees are based on actual distance, and your apportioned vehicle gets one cab card with all IRP jurisdictions on it so it can travel to any member state or province during the license year, any time, without permits.
“We need that,” the hot shot owner said. “Can we do that?”
Like so many regulatory issues, big truckload carriers dominate the discussion about the benefits of prorate. Not enough specialized carriers have gotten the message about FRP even though it might help them the most.
Consider the hot shot carrier.
Hot shots get paid to deliver a dedicated load, fast (there’s one in Edmonton with the slogan, “From A to B, don’t stop to pee!”). These carriers never know where they’re going on any given day. They only know they need to be ready to roll when a customer calls.
Applying for trip permits takes time that no one really has. It’s the same for wreckers and other carriers in “emergency” service.
IRP is ideal for these fleets. Yet traditionally they avoid it.
Pick Your Poison
If you think trip permits are a pain, try prorating registration fees when you don’t know where your next job is going to take you.
I mean, how do you estimate distance when two years ago you traveled in Alberta and British Columbia, last year you were in Alberta, Saskatchewan, and Montana, and this year, who knows?
What do you put on your cab card? Do you add Idaho, Wyoming, and North Dakota and pay extra because you think you might get a call to go there?
Let’s say you’re based in Alberta and didn’t travel in Saskatchewan last year but you might this year. Before FRP, you’d have to estimate distance for Saskatchewan, pay fees for distance you haven’t travelled, and get new cab cards.
What a mess!
It’s expensive, too. When you’re renewing a fleet, the distance used to calculate your fees is from the previous year (the reporting period is July to June). Imagine the distance you accumulated between July to June of the previous year as a complete pie. That pie is then divided out on a percentage basis to all of the jurisdictions you traveled to during the reporting period.
To add a jurisdiction, you need a slice over and above what’s in your pie tin. You’re paying more than 100% of the amount you should be paying for license fees.
If you add a bunch of jurisdictions, it makes for a very expensive pie.
Why FRP Works:
FRP takes all of that away.
If you’re an existing carrier renewing your fleet this year, you’re going to report all actual distance accumulated during the distance-reporting period (July 1-June 30).
The beauty is that you pay for only the jurisdictions where you traveled in the previous year regardless of where you need to travel this year. It eliminates estimated distance on renewals—your pie never costs more than 100%—and assesses fees based on actual operations. (If you’re a new fleet with no actual distance to report, use your base jurisdiction’s average per vehicle distance chart to determine your fees.)
And when you get your cab card it will have every IRP jurisdiction on it, giving you the ability to dispatch a truck and help a customer at the drop of a hat.
The hot shot, wrecker, and emergency freight haulers I know got into the business because they want a “go anywhere, anytime” type of job. If you’re running irregular routes and have been put off by prorate in the past, FRP—and the flexibility it gives you—make it worth another look.
A lot of this can seem hard to navigate. So many boxes to check and steps to take. We want to help.
Please take a moment to take a look at our Free Fleet Tax Compliance Toolkit.
This tool kit is made up of these invaluable resources and tools:
- Fleet Tax Compliance Guide (7 Critical things you need to know about Fleet Tax Compliance)
- [VIDEO] IFTA Fuel Tax 101
- Driver Trip Report (Excel Spreadsheet Template)
- How To Use the Driver Trip Report
- GPS Reporting & Checklist
If you have any questions regarding IFTA regulations or protocol, please reach out to us, we are here to help. Call us today or drop us a line via email. Here is our contact information:
Call us Toll Free: 1-877-860-8025
About the Author:
Sandy Johnson is the founder and managing partner at North Star Fleet Solutions in Calgary. The company provides vehicle tax and license compliance services for trucking operations ranging from single vehicles to large fleets. She can be reached at 877-860-8025 or northstarfleet.com.