The city Parking Authority failed to deduct payroll taxes from the buyout payment it made to former Executive Director Anthony Scarduzio and may be forced to come up with nearly $40,000 to correct the mistake.

Under Scarduzio's buyout contract, the board of commissioners agreed to pay him a total of $129,402.50 in two equal installments.

Scarduzio received the first installment June 1. He is scheduled to receive the second installment in January.

Upon the advise of its lawyer, Carlos Morcate, the agency did not deduct payroll taxes from the first installment as it should have.

"My position was it was OK if Tony wanted to pay his own taxes," Morcate said during an interview Thursday. " Unfortunately, I didn't go to a tax lawyer to ask if there was a problem pursuing it this way. As it turns out now, we should have."

Morcate said he takes full responsibility for the mistake.

He also said Scarduzio had agreed to reimburse the authority $25,000 - the amount that would have been deducted on the first payment of $64,701.

Authority director Judy Fulton said she received word from the agency's financial consultant that Scarduzio backed out of that promise.

Scarduzio, who is the target of a criminal investigation, could not be reached for comment.

The authority can correct the problem in its books and with the IRS by considering the payment to Scarduzio as a net payment. That means his actual gross payment would have been about $104,000, significantly more than what the board had agreed to. About $40,000 in payroll deductions would be due on that amount.

The additional money may be able to be taken out of Scarduzio's second payment, Fulton said.

Fulton sent a memo to the Board of Commissioners advising them of the problem.

"The situation will be addressed at the next meeting," Fulton said.

The authority is slated to meet July 7 at 10 a.m.