Letter 2057-C: CAWR closing or explanation letter; may ask for more reasonable-cause detail

What Letter 2057-C is

The universal CAWR correspondence letter, issued through the CATRS case system (IRM 4.19.4.7(4), June 11, 2025). It closes a case with an explanation, tells a Form 945 filer that "Forms 1099-R are not subject to Backup Withholding and that we have adjusted their account accordingly" (IRM 4.19.4.3.32(2)), rejects magnetic media and asks for a listing or paper (IRM 4.19.4.3.7), and, when a reasonable-cause statement is incomplete, asks "what took place at the time the error was discovered" or how recurrence was prevented (IRM 4.19.4.3.1.4(7) and (8)). For a tax assessment of $100,000 or more it is also the required second contact before assessment (IRM 4.19.4.4(12)).

The deadline

Reply by the date on the letter; a case awaiting more information is suspended and then assessed. Extra time is 30 days from your correspondence (IRM 4.19.4.3.29).

What to do

Read which paragraph you received. If it closes the case, keep it with the year's payroll file; a reclassified Form 945 needs no further action. If it asks for reasonable-cause detail, answer both examiner questions in writing: what you did when the error was discovered, and what you changed so it will not recur, covering the entire period from the W-2 due date to now (IRM 4.19.4.3.1.4(5) and (6)). If it rejects a tape or disc, send a listing with employee name, SSN, wages, tips and withholding (IRM 4.19.4.3.1.3(2)).

The CAWR program in one paragraph

The Combined Annual Wage Reporting program reconciles two sets of numbers that should agree: the wage and withholding totals on the Forms W-2 an employer sent to the Social Security Administration, and the totals the same employer reported to the IRS on its Forms 941, 943, 944 and, for backup withholding and gambling withholding, Form 945 together with the withholding shown on its W-2Gs and 1099-Rs. SSA runs the first comparison and refers unresolved cases to the IRS (Letter 98-C); the IRS runs the second (Letter 99-C). A payer that does not reply, or replies without resolving the difference, is assessed the tax implied by the higher set of figures, or an information-return penalty for the W-2s it appears never to have filed. Letter 2057-C is the general-purpose letter the CAWR unit uses to close, explain or ask for more, so what it says depends on which paragraph you were sent.

The usual causes on the Form 945 side

For a Form 945 filer the common discrepancies are mechanical. Withholding on Forms 1099-R was reported on Form 945 but the 1099-Rs were not filed, or were filed under a different EIN (a plan trustee's, or a payroll provider's). Form W-2G withholding was reported on the wrong return. Backup withholding shown in box 4 of 1099s was reported on Form 941 instead of Form 945, or the reverse. A Form 945-X was filed to correct a year and the W-2Gs or 1099-Rs were never corrected to match, or corrected 1099-Rs were filed and the 945 was not. Each of these is resolved by sending the CAWR unit the listing or the corrected returns that make the two sets of figures agree, with a short cover explanation. Where the letter asks for more reasonable-cause detail, answer the two questions it poses in writing (what you did when you found the error, and what you changed), covering the whole period from the original due date to the present. The CAWR guide walks through the reconciliation; the Form 945 withholding checker tests your figures the way the unit does, and the CAWR reasonable-cause template is built around those two questions.

Questions about Letter 2057-C

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