The Internal Revenue Service ­withheld $707,757, or 15%, of the District of Columbia’s Dec. 1 Build America Bond subsidy payment because of payroll taxes, making the city the latest issuer caught by surprise with an offset.

The city was notified by the IRS in November that the offset would be withheld from its scheduled $4.7 million subsidy payment. Officials said the subsidy payment was for its first BABs, which totaled $630.9 million and were sold in December 2009.

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