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Carriers cannot borrow equipment from one another and maintain an “arm’s length agreement,” without the benefit of a lease or similar agreement.
When services or assets are received at no cost or under their true value, there may be tax consequences. To determine if the services are undervalued, the Internal Revenue Service (IRS) uses the concept of an “arm’s length standard.”
Because of the unique nature of the transaction, the FMCSA allows a simplified lease agreement.
Leases that are conducted between two for-hire carriers or a private carrier leasing to a for-hire carrier have simplified requirements which include:
The company operating the vehicle is responsible for compliance. All roadside inspection violations, citations, vehicle inspections, accidents, belong to the carrier – not to the leasing company, staffing agency or 3rd party provider.
The responsible carrier’s name and USDOT number need to be on the vehicle or, if a short-term rental, the qualifiers of the marking exception of �390.21(e) met.