Errors in processing town payroll have prompted selectmen to schedule an emergency meeting with the Budget Committee at 5 p.m. today.

Administrators said the town will be assessed penalties and interest on improperly withheld employment taxes.

At today’s meeting, selectmen will consider scheduling a special town meeting to get residents’ approval for a new appropriation to deal with those errors.

During the town meeting, potentially set for January, residents would consider an article to appropriate $40,000 from surplus for the retirement benefits, Medicare and FICA account of Treasurer Lisa M. Wallace. The money would cover past FICA and Medicare payments owed, according to Town Administrator Mike Young.

Young said the total due from the town to the IRS will be approximately $35,577. The town would pay the debts and then collect the treasurer’s share through a time payment plan, Young said.

Selectman Everett Perkins said Monday he is confident Wallace did nothing wrong.

“This is clearly nothing more than a mistake,” Perkins said. “I asked her point-blank, and she answered me point-blank.”

During the FY 2012 audit, auditors discovered that in calendar year 2008 the treasurer mistakenly coded her personal deductions in the payroll computer system to stop withholding FICA and Medicare payments, Young said. This affected the FICA/Medicare withholdings for the years 2008 through 2012.

The result, according to Young:

— The treasurer owes $12,661 to the town for her share of the withholdings.

— The town owes $14,232 to the IRS for its share of the withholdings.

— Interest owed to the IRS will be approximately $6,000, with 25 percent paid by the treasurer.

— Penalties, if not forgiven by the IRS, will be approximately $2,684, with 25 percent paid by the treasurer.

Also during the FY 2012 audit, Young said, it was discovered that the treasurer had used the wrong withholding amounts for the employer’s share of FICA for all employees.

Prior to calendar year 2011, the employee share for FICA withholdings was 6.2 percent of their pay and the town share of the withholdings was a match of 6.2 percent.

In January 2011, the employee share of the withholdings was reduced to 4.2 percent but the town share was supposed to remain at 6.2 percent.

Young said the treasurer mistakenly reduced both the employee and town shares for withholding to 4.2 percent, which resulted in the town underpaying its share by 2 percent.

This required an extra $8,552 in tax, interest and penalties for FY 2012 in addition to what was already spent, which the auditors have taken from the balance of the “Administration Insurances and Benefits Account,” Young said.

However, this problem continued into the first two quarters of FY 2013 and tax, interest and possible penalties of approximately $4,000 in excess of the originally appropriated amount will need to be paid, Young said.

The town will owe an estimated total of $39,577 in FICA and Medicare withholding taxes, interest and penalties. Selectmen will have a legal contract with the treasurer for reimbursement of her share of the withholdings plus 25 percent of the interest and penalties.

They are also researching the possibility of reimbursement through the Treasurer’s Performance Bond Insurance Policy, Young said.

“I would like to emphasize that the ($26,893) withholdings due, as well as the 2 percent underpayment from the town would have been spent anyway,” Young said. “The net loss to the town will be the interest and assessed penalties.”

Wallace — who is elected — has served three terms as treasurer and tax collector since 2004. The positions are three-year terms and her positions will be up for election this year in May. She is currently on vacation until Jan. 9.