Who is responsible for the fees and costs of the arbitrator for a tax appeal taken to arbitration?

In the context of tax appeals taken to arbitration, the responsibility for the fees and costs of the arbitrator typically falls on the party whose value is farthest from the fair market value. This system is designed to encourage reasonable expectations in the valuation process and discourages parties from taking unsubstantiated positions.

When one party significantly deviates from what is considered fair market value, it indicates a lack of reasonable grounds for their valuation. In this instance, it is generally seen as appropriate for that party to bear the costs associated with arbitration. This approach promotes fairness by incentivizing all involved parties to substantiate their claims with realistic evaluations, ultimately helping to streamline the arbitration process and resolve disputes more efficiently.

The other responses do not accurately reflect the established practices in arbitration for tax appeals, as they suggest differing criteria for assigning the costs, which typically are not aligned with fair market assessments or arbitrary classifications of value.